The NSW Government is seeking tender applications from mortgage providers to join a panel of lenders for its Shared Equity Home Buyer Helper Scheme, which was launched last week.
Under this program, the NSW Government will contribute a portion of the purchase price of a property in exchange for an equivalent interest in the property via a second mortgage. Up to 3000 places will be available for eligible borrowers during each of the 2022/23 and 2023/24 financial years.
All potential first home buyers need to have at least a 2 per cent deposit, while the NSW Government will contribute up to 40 per cent for a new home or 30 per cent for an existing home.
The target market is first-home buyers who are "key workers" – for example nurses, midwives, paramedics, police officers, teachers and early childhood educators – along with single parents caring for children and singles older than 50.
Further eligibility criteria include:
• maximum gross income of A$90,000 for singles and $120,000 for couples;
• applicants must have a minimum deposit of 2 per cent of the purchase price;
• the maximum value of property that can be purchased is $950,000 in Sydney and regional centres including the Central Coast, Illawarra, Lake Macquarie, Newcastle and the North Coast of NSW, and $600,000 in other parts of NSW; and
• applicants must not be able to afford to purchase the property without the assistance of this program.
NSW Treasurer Matt Kean said his government had set aside up to $780 million for the scheme, which will feature "smaller deposits, no lenders mortgage insurance and no interest [to be charged] on the Government’s equity share".
Access to the Shared Equity Home Buyer Helper is currently only available through Bendigo Bank, which trumpeted its participation in mid-December last year.
At the time of the program's official launch last week, its launch lending partner Bendigo Bank had received 3,500 enquiries.
Bendigo, for all its bluster, remains a small presence in NSW, with just six corporate offices and 45 community banks in the state, although it does have form when it comes to lending to buyers via shared equity or other government-backed schemes. Bendigo has approved around 2000 home loans under the Victorian Homebuyer Fund (roughly similar to the NSW approach) and a similar number under the Federal Government's First Home Guarantee Schemes.
Nevertheless, the NSW program will certainly need the help of some savvy mortgage providers and brokers if it's to have any degree of success, even though property values have retreated over the past 12 months.
Data from property information provider CoreLogic for the year to 31 January shows up the limitations of this program. For instance, the median house price on Sydney's Northern beaches, Ryde and inner west area exceeded $2 million, while in the east the median price was headed towards $3 million. All this after most areas dropped 15 to 20 per cent.
It's better news for first responders and educators looking to buy a house in Newcastle and the North Coast, with media house prices scattered around $800,000.
On the other hand, median Sydney apartment prices across the board were generally within or close to the pre-set upper limit of $950,000.
It's the income test for "key workers" that is likely to attract more attention, though, with few state employees likely to qualify for the largest loans. For instance, in the NSW Police, a constable with five years' service will be earning $86,517 - nicely within the eligibility rules, but it gets tricky after that.
NSW Education shows the median starting salaries of bachelor degree teaching graduates is just under $74,000 rising to more than $126,000 for an assistant principal or head teacher.