HOPE's Jessica Ellerm
There are stirrings of interest and the beginnings of a whole new world of home finance, as two glitzy state shared equity schemes rev up and one private sector partnership combine to make shared equity funding an enterprising corner of modern Australian finance.
In Tasmania, Bank of us is the sole partner with the state government.
Things only opened up a year or so ago and Bank of us has fielded 1000 or so enquiries, Paul Ranson, CEO of Bank of us told Banking Day.
Ranson said he estimated 60 per cent would progress.
He said the MyHome scheme settled 162 loans last year, a number that could easily balloon.
Tasmania’s government has opted not to limit, at least not yet, access to its balance sheet to make the scheme work.
In New South Wales, Unity Bank (an amalgam of bonded, blue collar credit unions) is the lucky second pick for the panel pushing Shared Equity Home Buyer Helper finance.
Bendigo was the first. Bendigo and Adelaide Bank general manager of retail banking Dennis Teale said “in just over six months our bank has helped 245 customers in New South Wales buy and move into their dream homes using the scheme. An additional 313 customers have pre-approval and are currently on the hunt for their dream homes.”
The NSW Government will contribute a proportion of the purchase price of a property in exchange for an equivalent interest in the property. The contribution is a percentage of the purchase price, with up to 40 per cent for a new home and up to 30 per cent for an existing home.
Key worker first-home buyers, including nurses, midwives, paramedics, police officers, teachers, and early childhood educators, can apply. Single parents and singles older than 50 can also apply, even if they have previously owned property.
“Smaller deposits, no lenders mortgage insurance, and no interest on the government’s equity share means this initiative is a great option for eligible applicants who no longer want to rent and prefer the security of home ownership,” Danny Pavisic, Unity Bank CEO said.
NSW-centred Police Bank, aided by partner HOPE Housing, is warming up its Essential Worker co-investment program to support home ownership.
“We take great satisfaction in having helped 20 essential workers and their families secure a home close to their workplace,” Jessica Ellerm, head of investor engagement at HOPE Housing Fund Management wrote in an email.
“Furthermore, our collaboration with Police Bank has resulted in an extensive demand pipeline, with over 300 inquiries awaiting attention.”
On the funding side, things are looking up for HOPE.
“We are incredibly busy with a steady flow of interested investors at various stages of due diligence on the HOPE Fund,” Ellerm said.
“We are gaining good momentum with the philanthropic sector who are well versed on impact investments.
“In the last month the Vincent Fairfax Family Foundation made an investment, joining other private foundations and family offices, and we are actively fundraising within this space.
“We continue to chip away at institutional investors, however we accept this will be a slower burn as they are less agile and more risk averse.
“We continue to work with our Advisory Board to build out the business case to invest in HOPE.”
“We’re ironing out the processes,” Greg McKenna, CEO of Police Bank said of a staged build-up in its capability in shared equity, a product launched by the bank and HOPE late last year.
“I’m hoping to get more interest from institutional investors,” he said.
“I’m surprised more are not forthcoming.”
“We’ve signed a three-year exclusive agreement with Police Bank, so until this agreement expires, or HOPE reaches a point whereby the bank can no longer solely support our volumes, we will continue to forge this partnership,” Ellerm added.
“Numerous other mutuals have shown keen interest in engaging with the program, and we can confidently affirm that this homeownership solution aligns seamlessly with the ethos of the mutual sector.”