NAB appointed as main lender for new home-buyers scheme

The National Australia Bank has been appointed as the first major lender for the government’s first-home loan deposit scheme.

NAB chief customer officer Mike Baird says the bank would update eligible customers in the lead-up to January 1. Picture: Britta Campion

The National Australia Bank has been appointed as the first major lender for the government’s first-home loan deposit scheme after committing to not charging ­eligible customers higher interest rates and offering guarantees when the housing stimulus package begins on January 1.

NAB was appointed following a “competitive procurement process”, with a group of smaller lenders to be finalised by mid-next month.

The scheme, one of Scott Morrison’s key pledges at the May election, provides a guarantee ­allowing eligible first-home buyers on low and middle incomes to buy a home with a deposit of as ­little as 5 per cent.

Housing Minister Michael Sukkar said the government wanted to “help make home ownership a reality for more Australians”, with the scheme supporting up to 10,000 loans each financial year.

The Australian understands there has been strong interest from major and minor lenders to join the scheme’s panel of participating lenders, with the National Housing Finance and Investment Corporation focusing on competitiveness, geographic reach and readiness to meet scheme ­implementation timelines.

“The first-home loan deposit scheme has been specifically ­designed to support first-home buyers purchase a modest home, getting them into the property market sooner,” Mr Sukkar said.

In a move to promote competition, the government has directed that the total number of guarantees issued to major banks in a financial year must not exceed 5000.

NAB chief customer officer Mike Baird said the bank would update eligible customers in the lead-up to January 1.

Mr Baird said NAB, heavily criticised in the final banking royal commission report handed down by Kenneth Hayne, was “proud” it had been selected to partner the government and described it as a “great endorsement” of the bank’s home loan offering.

“This scheme is a fantastic way of helping even more customers, allowing them to potentially save thousands of dollars on their mortgage,” Mr Baird told The Australian.

Since 2017, NAB has been the only major bank offering special rates for first-home buyers, with a 2.88 per cent annual rate fixed for two years.

The finance and investment corporation said it h ad received a “strong response from other lenders” and would announce more successful applicants subject to the finalisation of contract negotiations.

Once the scheme starts, applications will be lodged through participating lenders and their brokers.

Applicants are subject to eligibility criteria, including having taxable incomes up to $125,000 a year for singles and up to $200,000 a year for couples.

Property price caps apply under the scheme, with ­eligible properties in Sydney limited to those under $700,000 and $600,000 in Melbourne, while the threshold in the ACT is set at $500,000.

In the past year, about 110,000 Australians were estimated to have bought their first home — the highest level since 2009.

The Coalition has rolled out a raft of housing stimulus packages to drive the market, including its first-home super-saver scheme, unlocking new housing supply and supporting community housing providers.