Market Trends: What First Home Buyers Need To Know

Market Trends: What First Home Buyers Need To Know

There’s good and bad news for prospective first home buyers right now.

According to CoreLogic data, borrowing costs at record lows are giving owner-occupiers more muscle at minimal cost – as a result driving up prices of the most expensive properties.

We’ve seen homes priced in the top 25 per cent rise by 4.1 percent nationally over the three months to February across Sydney, Melbourne, Brisbane, Darwin and Canberra.

Yet official data also reveals loan volumes to first home buyers have overtaken those to investors last year.

First-time buyer new loan commitments made up 26.2 percent of April’s near-35,000 monthly loans, more than investors’ 25.6 percent, and have continued to grow.

The latest figures for January give first home buyers a 30.9 per cent share and investors just 22 percent.



These stats can be attributed to a number of factors, notably incentives for first home buyers such as the FHLDS.

What is the FHLDS?

A Federal Government initiative, the First Home Loan Deposit Scheme (FHLDS) is designed to support eligible first home buyers in building or purchasing a new home.

In normal circumstances, first home buyers with less than a 20 per cent deposit need to pay lenders mortgage insurance.

However, under the scheme, they can purchase or build a new home with a deposit of as little as 5 per cent (subject to lenders’ criteria). The key to the scheme is that the NHFIC (National Housing Finance and Investment Corporation) guarantees to the lender up to 15 percent of the value of the purchased property, financed by an eligible first home buyer’s home loan.

The 2020-21 Federal Budget included an additional 10,000 FHLDS places, specifically for eligible first home buyers building or purchasing new homes.

Rules of Eligibility:

The First Home Loan Deposit Scheme is open to singles or couples – and also includes those looking to apply as a de facto couple.

Unfortunately, please note, home loan arrangements made with family or friends – with more than two borrowers, or any instance where the other borrower is not your spouse or de facto partner, are ineligible.

Otherwise, your eligibility will be determined by some of the following checks:

  • an income test
  • a prior property ownership test
  • a minimum age test
  • a deposit requirement, and
  • an owner-occupier requirement.

You’ll also find that maximum purchase prices (property price caps) are applicable for eligible properties purchased under the FHLDS.

Check out the table below for the maximum purchase price under the Scheme and the FHLDS (New Homes) for NSW:


Good news for First Home Buyers:

So, unfortunately the waiting list of FHLDS for the 2020-21 financial year has already been closed by all participated lenders.

However, in Feb 2021, the Assistant Treasurer and Minister for Housing, Michael Sukkar, announced that the federal government is to reissue unused First Home Loan Deposit Scheme (FHLDS) guarantees from the 2019-20 financial year.

Under the first tranche of the scheme (which ran from 1 February to 1 July 2020), 10,000 places were made available. Of those, nearly 2,000 guarantees were not finalised – due to first home buyers, at the time, not able to settle on a purchase.

So now these places are released and the waiting list is open for potential first home buyers!

Please contact us at OzBroker for a free consultation to see if you qualify for purchasing or building a new home with the 5% deposit. From there, we can take you through what’s involved in the process – helping make the dream of a first home a reality!

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top