Why Major Banks Are No Longer Offering Bank Guarantees
You’ve found the perfect off-the-plan property, but when you walk into your bank to arrange a bank guarantee for the deposit, you’re met with unexpected news: “We don’t offer those anymore.”
Over the past 12 to 18 months, three of the four major banks, along with several second-tier banks, have limited issuing bank guarantees to individual property buyers. This leaves many Australians wondering how to secure their property purchases.
What Is a Bank Guarantee in Property Transactions?
A bank guarantee is an irrevocable undertaking from a bank to pay a specific amount if you fail to meet your obligations under a contract.
In property purchases, bank guarantees worked like this: the bank would issue a guarantee to the vendor for 10% of the purchase price. The vendor would hold this guarantee until settlement. If you defaulted on the purchase, the vendor could claim payment from the bank on demand, similar to how deposit bonds work today.
Why Major Australian Banks Have Stopped Issuing Bank Guarantees
The number of buyers contacting ENAYBL after being refused bank guarantees has increased dramatically. What we’ve found is that three of the four major Australian banks, plus several second-tier banks, are no longer issuing bank guarantees to retail customers.
This isn’t just about property purchases. The policy extends across the board to all retail customers. Banks will still issue bank guarantees to corporate clients for commercial purposes like performance contracts and lease bond requirements. However, with several banks they’re no longer available to individuals or it is otherwise difficult to obtain one. It’s not a property-specific restriction but a general retail policy change.
So why the shift?
One major bank explained that they don’t want bank guarantees linked to future lending commitments in customers’ minds. If a bank issues a guarantee today to help you secure a property, they don’t want you assuming the bank will provide the home loan at settlement. The difference between issuing a guarantee and committing to lend creates risk management issues for banks. They’re essentially drawing a clear line between different financial products and services.
Another major bank advised the reason they have ceased issuing bank guarantees was due to “the process and ongoing maintenance involved for these facilities which does not fit the retail space.”
What This Means for Australians Buying Property
This policy change particularly affects two key groups of buyers.
Off-the-plan buyers
Off-the-plan buyers are feeling the impact strongly. Buying a property off-the-plan, a process of purchasing before a building is complete, as outlined by the NSW Government, means completion can take anywhere from 2 to 5 years. Previously, some buyers used bank guarantees to secure these purchases. Now that option is all but gone, and tying up a 10% cash deposit for years doesn’t appeal to everyone.
Buyers selling one property to buy another
Buyers selling one property to buy another face a similar challenge. You might find your perfect new home before your current property sells. Without bank guarantees available, you’re left choosing between missing out on the new property or finding alternative ways to come up with the deposit.
We see this all the time. Young professionals with money invested in shares don’t want to liquidate their portfolio. Downsizers who have all their money tied up in the equity of their home. Investors with equity but limited liquid cash want to expand their portfolio. All these situations require flexible deposit solutions that traditional cash deposits can’t provide.
How to Obtain a Deposit Alternative in 2025
Since several major banks are no longer issuing bank guarantees to retail customers, understanding how to obtain a deposit bond alternative has become essential for Australian property buyers.
Deposit bonds have surfaced as the modern alternative to bank guarantees. They’re insurance-backed guarantees to the vendor that work similarly to how bank guarantees once did. Vendors accept them just like they accepted bank guarantees, but with some essential differences that work in your favour.
Here’s how deposit bonds work: instead of tying up 100% collateral like bank guarantees required, you pay a one-time fee. The insurance company backs the guarantee, giving the vendor the same security they had with bank guarantees. If you default on the purchase, the vendor claims payment from the insurer.
Comparing Your Options:
| Feature | Bank Guarantee | ENAYBL Deposit Bond |
|---|---|---|
| Availability | No longer available to individuals | Readily available |
| Collateral required | 100% of guarantee amount | None |
| Cost | Multiple fees + 100% collateral | One off fee |
| Processing time | N/A (not available) | Quick approval 24-48 hrs |
| Capital freed up | No – tied to collateral | Yes – full amount freed up |
You can keep your deposit working for you in other investments rather than locking it away as collateral. Deposit bonds bridge the gap between buying and selling, makes cash flow easier to manage, and provide flexibility for off-the-plan purchases where your money would otherwise sit unused for years.
How Much Does a Bank Guarantee Cost?
When asking “how much does a bank guarantee cost?”, many buyers were surprised by the true expense. Bank guarantee fees included establishment charges, annual maintenance fees, and administrative costs. But the real cost came from the collateral requirement. Bank guarantee charges extended beyond the upfront fees because you needed 100% of the guarantee amount tied up as security. For a $100,000 deposit, you’d need $100,000 sitting with the bank, essentially making it an expensive way to prove you had the money. This is why deposit bonds have become the more attractive option for Australian property buyers.
Making Your Property Purchase Happen
Getting started with an ENAYBL deposit bond is straightforward. The application process is quick, and approvals often happen within days. You’ll need to provide some basic financial information and details about the property you’re purchasing.
Vendors across Australia readily accept ENAYBL deposit bonds as they are underwritten by QBE Insurance (Australia) Limited (QBE) with a AA- credit rating. Like bank guarantees, deposit bonds issued by ENAYBL and underwritten by QBE, are irrevocable and payable on demand, giving vendors the security they need.
Secure Your Property Purchase Today
Don’t let the bank guarantee policy change hold you back from securing your ideal property.
Several major Australian banks have stopped offering bank guarantees to individuals, but you have options. Deposit bonds provide the flexibility you need without tying up your capital or requiring 100% collateral. The process is easy to follow, and vendors accept them with confidence.
Contact us today to learn more about how a deposit bond can work for your situation, or explore our deposit bond options to see how simple the process can be.
Frequently Asked Questions
For individuals purchasing residential property, bank guarantees are no longer available from several of the major Australian banks and some second-tier banks. They remain available for corporate clients for commercial purposes only.
A bank guarantee is an irreversible promise from a bank to pay a beneficiary if the account holder fails to fulfill their obligations. In property transactions, it guaranteed the 10% deposit payment to the vendor if the buyer defaulted.
When they were available, bank guarantees required 100% collateral (cash or property security) plus establishment fees, annual fees, and administrative charges. This made them expensive in terms of both fees and tied-up capital. Deposit bonds now offer a more cost-effective alternative with just a one off fee.
No, bank guarantees are irreversible once issued, which provided security to vendors. Deposit bonds offer the same level of certainty and are also non-cancellable, ensuring vendors have the same protection.
Since several major banks no longer issue bank guarantees to individuals for property purchases, deposit bonds are now the preferred alternative. They provide the same security to vendors without requiring you to tie up capital.
Both guarantee payment to the vendor if the buyer defaults. The key differences are that bank guarantees required 100% collateral and are generally no longer available to individuals, while deposit bonds require no collateral, charge a one off fee, and are readily available.
Yes, deposit bonds are widely accepted by vendors across Australia as they provide the same security as bank guarantees did, backed by QBE with strong financial ratings.
The content of this blog reflects the personal views of the author and is for information purposes only. It does not constitute financial, investment or professional advice. Readers should conduct their own research and consult a qualified financial or property adviser before making any decisions to invest in property. The author and the blog are not responsible for any actions taken based on the content.
