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Liberty Financial has been added to Housing Australia’s online list of 30 participating lenders, making it the first non-bank to join the federal government’s flagship home ownership guarantee.
The specialist lender is well known for serving borrowers who fall outside traditional bank lending criteria, including self-employed clients, borrowers with non-traditional income streams, and those with more complex financial structures. It operates across home loans, motor finance, and commercial property lending.
The move brings an alternative credit provider into a scheme that now underpins a majority of first home buyer (FHB) loans.
The 5 per cent Deposit Scheme – an expanded evolution of the Home Guarantee Scheme – allows eligible FHBs to purchase with a deposit as low as 5 per cent and single parents or legal guardians with as little as 2 per cent, without paying lenders mortgage insurance.
The government, via Housing Australia, provides a guarantee that covers the gap between the borrower’s deposit and the usual 20 per cent equity buffer.
Housing Australia said in March that more than 300,000 Australians had bought or built a home with support from the guarantee.
Since its expansion, the scheme has supported an average of around 5,670 loans a month. Over the same period, Australian Bureau of Statistics data showed FHBs taking out about 10,181 loans a month overall, indicating the majority of first home buyers are now entering the market through the scheme.
Lender panel continues to grow
Housing Australia told Broker Daily that the appointment of Liberty to the scheme’s panel followed a “competitive Request for Proposal process” and that despite being a non-bank lender, the requirements surrounding serviceability, verification, reporting, and audit obligations would remain the same.
Housing Australia said: “The addition of Liberty provides eligible home buyers with greater choice and access to the Scheme while maintaining the same safeguards and standards and consumer protections that apply across the Scheme.
“Expanding the lender panel helps improve accessibility to the Scheme and supports more Australians on their pathway to home ownership.”
Liberty’s inclusion comes as the lender panel continues to expand.
All four major banks now participate in the program following ANZ’s decision in March to join the scheme.
More than 30 smaller, regional, and customer-owned institutions – including Bendigo Bank, Bank Australia, and a range of credit unions and mutuals – also offer guaranteed loans.
However, the surge in demand following the scheme’s expansion has placed pressure on processing times.
Housing Australia has publicly called for more lenders to join both the 5 per cent Deposit Scheme and the separate Help to Buy program.
Beyond Bank, for example, temporarily paused accepting pre-approvals late last year following a spike in applications under the scheme.
The scheme has also shifted market behaviour.
Recent Equifax Trends & Insights data showed credit inquiries from first home buyers aged 18–25 rose 22.8 per cent following the October expansion, making them the fastest-growing age group. Credit inquiries from first home buyers aged 26–35 and 36–45 also increased by 17.4 per cent and 16 per cent, respectively.
Affordable markets feeling the pressure
Economists, including those at property analytics firm Cotality, have indicated the expanded guarantee is boosting demand across more affordable parts of the housing market.
Analysis from Cotality published earlier in the year found homes priced below the revised property price caps have recorded stronger price growth than higher-priced properties since the October changes, with under-cap markets outperforming across almost nine in 10 regions.
Nonetheless, more recently, mortgage applications among first home buyers have fallen amid increased interest rates, budgetary changes, and a more uncertain economic outlook.
Tweaks to the scheme
Liberty’s appointment also follows a series of changes to the 5 per cent Deposit Scheme that came into effect on 1 July.
The updates included a higher property price cap for Darwin, which increased from $600,000 to $750,000, while four additional regional NSW markets – Central Coast, Coffs Harbour–Grafton, Mid North Coast, and Richmond–Tweed – became eligible for the state’s higher $1.5 million price cap.
The scheme’s refinancing rules were also updated, extending the validity of refinancing inquiry responses from 30 to 42 days and allowing eligible refinancing costs to be capitalised into new loans when borrowers switch between participating lenders.
New retained savings requirements were also introduced for scheme places reserved on or after 1 July. Under the changes, applicants cannot retain savings exceeding six months of living expenses plus six months of home loan repayments after settlement, with an additional 5 per cent buffer applying to construction loans.
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