Broking industry calls out shared-equity rollout, but it’s early days for the scheme’s administration
The highly anticipated Help to Buy scheme finally goes live this Friday, but not everyone in the broking community has been impressed by its rollout.
Under the scheme, eligible Australians will be able to access a shared-equity deal where the government chips in up to 30% of the price of an existing home or up to 40% for a new build.
Borrowers will be able to purchase a home with as little as a 2% deposit without lenders’ mortgage insurance (LMI).
Administered by Housing Australia, the scheme is targeted towards low- and middle-income earners, with income thresholds capped at $100,000 for individuals and $160,000 for joint applicants and single parents.
While senior figures in the broking industry welcomed the opportunity to get more Australians onto the property ladders, they were quick to call out primary vendor Commonwealth Bank’s decision not to offer the scheme through the broker channel.
“Shared equity is a significant long-term commitment. Borrowers need clear, impartial guidance to understand how the Government’s equity share in their home works, what it means for future borrowing capacity, and how it may impact refinancing or selling,” Anja Pannek, chief executive of the Mortgage and Finance Association of Australia (MFAA) said. “This means access to the scheme has to be available through mortgage brokers.”
Peter White, managing director of the Finance Broker Association of Australia (FBAA). Took things further, saying CBA is “killing the goose that laid the golden egg” by excluding brokers.
He continued: “By putting itself forward as a participating lender and then excluding applications from anyone other than direct clients of CBA, it would seem Australia’s biggest bank has taken a national scheme underwritten by taxpayers and turned it into a proprietary marketing tool.
“The fixation from major banks on excluding brokers from the home loan process comes with a huge downside for borrowers, many of whom won’t be eligible for products they offer.
Responding to this growing chorus of discontent, Baber Zaka (pictured), CBA’s general manager third party banking, said: "Mortgage brokers play an important role in supporting home ownership in Australia, particularly for first home buyers who are navigating the process for the first time.”
Zaka noted that the scheme is in its early stages with a limited number of placements. And while it is not currently offered through the broker channel at CBA, “we continuously review our distribution strategy and that might change in the future”.
Zaka added that brokers have been instrumental in delivering the expanded Australian Government 5% Deposit Scheme “and CommBank is proud to be a leading lender in that program, working side-by-side with brokers to support more Australians secure their first home”.
He said: “Our focus remains on helping customers to achieve their home ownership objectives and on supporting brokers through investing in innovative technology and comprehensive systems that make working with CBA seamless and industry leading.
“We’re continuing to invest in platforms like CommBroker and integrations such as PEXA Settlement, giving brokers near real-time updates on settlements and soon the ability to self-serve escalations. These innovations are designed to save time and help deliver exceptional outcomes for customers."
