Are First Home Loan interest rates higher than normal?

Short answer: Same bank rates, but plus 1% annual lender premium to the government.

What this actually means in plain English

The interest rates are the same as normal home loans from the same bank. But you pay an extra 1% per year as a lender premium because the government is backing your small deposit. This premium goes to the government, not the bank. It is the cost of being able to buy with only 5% down.

Key Facts

Base interest rate: same as standard bank rates
Lender premium: 1% of loan amount per year
Premium paid to government, not bank
Premium decreases as you pay down the loan

Example

Loan Amount: $570,000

Bank Rate: 7.0%

Lender Premium: 1.0%

Total Rate: 8.0%

Extra Cost: $5,700/year ($475/month)

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