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More first-time home buyers seek government assistance to join the market.

More first-time home buyers seek government assistance to join the market.

More first-time home buyers seek government assistance to join the market.

According to the National property Finance and Investment Corporation, the number of first-time home purchasers using the federal government's Home Guarantee Scheme since its debut four years ago has increased as it becomes more difficult to enter the property market.

In order to avoid paying mortgage lenders insurance, the programme, which provides three types of guarantees, enables first-time homebuyers to purchase a home with a minimum deposit of 5%. The federal government guarantees the balance of the 20% deposit, which is needed to avoid having to pay for insurance.

The NFHIC's (National Housing Finance and Investment Corporation) fourth annual trend and insights report states that for the 2023 fiscal year, there were 45,000 more first-time home purchasers who utilised the programme.

In order to enter the housing market, almost one in three first-time buyers needed access to the programme, up from one in seven the year before.

The larger percentage of first-time homebuyers who used the programme was caused by a number of variables, including a more difficult housing market and a greater number of open programme spots.

According to CoreLogic, national home prices have climbed by 4.9%, and Sydney home prices have increased by 8.8%. Due to this, saving a 20% deposit for a typical house now takes Sydney first-time buyers 12.3 years, up from 11.8 years in the March quarter. This has increased the deposit barrier throughout the larger capital cities.

NHFIC believes that without access to the programme, purchasers would have to put off buying a home by an average of five years in order to save the full 20% down payment.

Since 13% of guaranteed loans (9700) have left the programme by refinancing their property with a regular commercial mortgage, the government aid looks to be helping first-time homebuyers make the move into homeownership.

The programme also caused more vital workers to enter the property market. In 2022–2023, around 7700 guarantees were given to important employees, up 37% from 5650 in 2021–2022 period. One in four buyers who used the first home guarantee were key workers.

"The programme is assisting more Australians, including important employees and residents of rural areas, in purchasing their own home earlier. It's encouraging to see the growing number of participants who have amassed sufficient equity to exit the programme, according to Jennifer Chew, chief homeownership programme officer at NHFIC.

In the meantime, the scheme's arrears rate has been at 0.1 percent, which is lower than the market average for lending with a high LVR (loan-to-value ratio). However, the NHFIC cautioned that because of the rising cost of living, the scheme's arrears were likely to increase along with the overall market for home loans.

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