Lowest rates from banks in the First Home Loan Deposit Scheme

Lowest rates from banks in the First Home Loan Deposit Scheme

The First Home Loan Deposit Scheme (FHLDS) is officially accepting applications, with 3,000 first home buyers already reserving a place as of 1 January, according to Domain data.

As of 10 January, 190 first home buyer applications have been pre-approved. They are mostly single buyers with a median income of around $68,000.

The FHLDS, which sees eligible first home buyers get home loan approval with deposits as little as 5 per cent, will be implemented by 27 Australian lenders. Read more about how the First Home Loan Deposit Scheme works.

What do the experts think?

Minister for Housing, Michael Sukkar, boasted that the scheme will make home ownership “a reality for more Australians”.

“This Scheme is a fantastic way of helping even more customers, allowing them to potentially save thousands of dollars on their mortgage,” he said.

Domain economist Trent Wiltshire warned that although the scheme will be helpful for some individual buyers, it was not a “silver bullet” to improve affordability.

“I think the scheme will put a little bit of upward pressure on prices at the lower to middle end,” he said.

“Any impact when prices are rising quickly is not ideal.”

Further, a recent Domain article noted that Mr Wiltshire expects first-home buyers to be “active in 2020, trying to get into the expensive Sydney market before rebounding prices rise too much, and take advantage of low interest rates”.

Sally Tindall, research director at RateCity, said while the program will help people avoid costly lenders mortgage insurance, which can run into the tens of thousands of dollars, first home buyers should consider the scheme cautiously.

“Just because the government is encouraging people to borrow with as little as a 5 per cent deposit doesn’t necessarily make it a great idea,” she said.

“People that borrow with a wafer-thin deposit might get into the property market faster, but they’re likely to make higher monthly repayments and shell out tens of thousands in extra interest over the life of the loan.

“If you are thinking about signing up to this scheme, go in with your eyes wide open because it’s peppered with potential drawbacks.

What home loan rates are on offer?

The National Housing Finance and Investment Corporation (NHFIC) is the government body administering the FHLDS.

Fiona Benson of the NHFIC has stated that “all participating lenders are supporting the Scheme by not charging eligible customers higher interest rates than equivalent customers outside of the Scheme”.

If you are considering taking up the FHLDS, it’s still crucial you compare your options and weigh up the pros and cons. Just because a lender could approve your home loan, doesn’t mean that home loan is the most competitive one for your financial needs.

A small home loan deposit also comes with its own set of risks, including:

  • If property prices fall by more than 5 per cent, you could find yourself in negative equity; and
  • When home loan rates rise again, the impact could really sting your budget.

With all of this in mind, these are the lowest rates being offered by the approved lenders for the FHLDS. These rates may not be what first home buyers are offered but can be a helpful starting point to familiarise yourself with the rates potentially on offer.

Lowest rates offered by approved lenders

Approved lenders Lowest owner-occupier variable rate Comparison rate
Australian Military Bank

3.31%

3.32%

Auswide Bank

3.09%

3.50%

Bank Australia

3.18%

3.55%

Bank First

3.19%

3.24%

Bank of us

3.18%

3.20%

Bendigo Bank

3.14%

3.31%

Beyond Bank Australia

3.15%

3.56%

Commonwealth Bank of Australia

3.22%

3.23%

Community First Credit Union

3.75%

3.82%

CUA

2.98% (Loan > 500K)

3.03%

Defence Bank

3.36%

3.36%

G&C Mutual Bank

2.79%

2.79%

Gateway Bank

3.01%

3.09%

Indigenous Business Australia

From 2.00% (depending on Gross Income)

-

Mortgageport

2.99%

3.05%

MyState Bank

3.08%

3.11%

National Australia Bank

3.09%

3.09%

P&N Bank

3.17%

3.17%

People’s Choice Credit Union

2.99%

2.99%

Police Bank (including the Border Bank and Bank of Heritage Isle)

3.18%

3.26%

QBANK

3.04%

3.07%

Queensland Country Credit Union

3.39%

3.79%

Regional Australia Bank

3.31%

3.75%

Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank Ltd)

3.22%

3.25%

Teachers Mutual Bank Limited (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank)

3.29%

3.34%

The Mutual Bank

3.73%

4.13%

WAW Credit Union

3.44%

3.49%

Source: RateCity.com.au

Note: Figures show lowest variable owner-occupier home loan rates. Data accurate as at 8 January.

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Mortgage Balance

The amount you currently owe your mortgage lender. If you are not sure, enter your best estimate.