National Australia Bank (NAB) is one of two current major banks that are part of the Home Guarantee Scheme, with the second being Commonwealth Bank. More could join following the request for proposal. Image: Canva.
  • There are currently 2 major banks and 30 non-bank lenders available through the scheme
  • Amendments were made to remove the 2 major bank limit
  • Western Sydney is will need to build 25,530 homes per year to meet future demand

The National Housing Finance and Investment Corporation (NHFIC) announced yesterday that it was commencing a ‘request for proposal’ or RFP process. This means one to two major banks have the opportunity to join the major bank lender panel for the Home Guarantee Scheme.

The Australian Government initiative to support eligible home buyers is currently available through Commonwealth Bank (CBA) and National Australia Bank (NAB), and 30 non-major lenders.

The RFP process follows amendments to the NHFIC’s Investment Mandate, where the 2 major bank limit has been removed.

The Home Guarantee Scheme comprises the First Home Guarantee, previously known as the First Home Loan Deposit Scheme, and the Family Home Guarantee. NHFIC administers the scheme on behalf of the Government.

For the 2022-23 financial year, NHFIC anticipates doubling the number of scheme places to up to 50,000, including 10,000 places in the Australian Government’s announced Regional First Home Buyer Support Scheme.

The proposed addition of another 1-2 major banks to the panel will provide home buyers with more choice of lenders and accessibility to the expanded Scheme.

The RFP opens today, 25 July 2022, and closes on 12 August 2022 11:59 pm (Sydney time). A decision to appoint any new lenders to the panel is expected in early September with new participating lenders to offer the Scheme from 30 September 2022.

Sydney house market supply critically low

While unrelated to the above news, the additional lenders may come in handy as the Sydney market is undersupplied.

New analysis from the Property Council of Australia and Gyde Consulting has found several Sydney suburbs are struggling to meet demand.

It only adds to housing affordability concerns, Property Council’s NSW executive director, Luke Achterstraat, said the results showed there was an underlying deficit of housing supply in Greater Sydney.

“Each year the dwelling targets are not met exacerbates this deficit and worsens the affordability crisis. Crucially, the current targets do not incorporate the deficit into dwelling demand, meaning that there is an underlying deficit that can persist, even when dwelling targets are achieved.”

Luke Achterstraat, PCA NSW Executive Director

Luke Achterstraat
Luke Achterstraat. Image – LinkedIn

“Ongoing delivery of housing above the identified target demand is required to manage this deficit and ensure sufficient housing supply for Greater Sydney’s population.

“At a minimum, housing targets must be met to avoid the deficit increasing.”

While there is a general concern, Mr Achterstraat said Western Sydney has been pulling its weight: “Councils in Western Sydney continue to lead the pack on the delivery of new housing supply with Blacktown, The Hills, Penrith, Liverpool and Wollondilly delivering beyond the five year targets set by the Greater Sydney Commission.”

There are of course pro’s and con’s to always consider, Mr Achterstraat said added that these areas “… have a higher proportion of greenfield development than other parts of Sydney, and while future projections may seem positive, the review of flood zoning and serviceability of new sites could lead to a curtailing of development in these communities.”

To keep up with demand, Mr Achterstraat said that Western Sydney needed 25,530 dwellings per year, currently, Western Sydney is 6,000 homes behind the goal.

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