Thousands of first home buyers using Federal Government’s First Home Loan Deposit Scheme

First home buyers are rushing to sign up to the Federal Government’s First Home Loan Deposit Scheme. This is how you can buy property sooner.

Exclusive: Thousands of first home buyers have signed up to the Federal Government’s scheme, eager to take advantage of low rates.

The extension to the second tranche of the popular First Home Loan Deposit Scheme began in October, generating 4200 entry-level buyer registrations, new figures show.

The federal government scheme allows borrowers to buy a newly-finished built property or one under construction up until June this year.

Prices are capped at up to $950,000, depending on the location the property is in.

Borrowers need to save just a five per cent deposit — the government contributes a further 15 per cent, allowing the buyer to avoid expensive lenders’ mortgage insurance.

This is usually charged when they do not have a 20 per cent deposit.

Since the commencement of the scheme a year ago, 15,000 first home buyers have settled and moved in to their property.

And News Corp can reveal a further 1800 spots will become available in coming days. These had been filled in round one of the scheme, but not used by the applicant

First home buyers need to save just a five per cent deposit.

There is no obligation with these spots to buy new builds — existing property is allowed.

Assistant Treasurer Michael Sukkar said the scheme helped first-time buyers break into the property market much sooner and helped bolster the construction industry.

“Since the commencement of the scheme a year ago there has been an extraordinary take up of guarantees by first home buyers,” he said.

“In just three months over 4200 first home buyers could purchase or build a new home with a guaranteed loan until June 30, 2021.”

Latest Australian Bureau of Statistics data in December showed owner occupier first homebuyer numbers are at their highest levels since 2009 at 9.3 per cent.

This is an increase of about 57 per cent from the same time last year.

Aussie Home Loans’ chief executive officer James Symond said first home buyers account for more than one in four loans written by the firm.

“This is nearly double today what it was 12 months ago,” he said.

“We are seeing so much more first homebuyer activity and lower interest rates are a driving factor.”

Mr Symond said the scheme as well as first homebuyer grants and other assistance measures such as stamp duty exemptions had been a huge financial help for entry-level buyers.

“It’s generally a seller’s market, so first homebuyers or any homebuyer needs to navigate through that they are getting the value from a property and take a long-term view,” he said.

Under the FHLDS scheme there are 27 participating lenders including two of the big four banks – the Commonwealth Bank and National Australia Bank – that offer spots in the scheme.

Latest CoreLogic figures show house prices reach a new record and have surpassed pre-COVID levels by 1 per cent – this is 0.7 per cent higher than the September 2017 peak.

@sophieelsworth