PRIME Minister Scott Morrison is proposing to bolster support for first home buyers via the First Home Loan Deposit Scheme.
Speaking at the official campaign launch, Morrison announced that should the government be re-elected, first home buyers would only need a 5% deposit rather than 20%, to purchase their home.
Under the plan, the government would guarantee the loan for the difference between 5% and 20%, so first home buyers would not have to buy mortgage insurance.
The scheme will be available to singles with an income of up to $125,000 or couples with up to $200,000 – if both are first home buyers.
The guarantee would remain for the life of the loan.
The policy will cost $500 million and will be available to the 10,000 first home buyers every year.
Opposition leader Bill Shorten said Labor would match the policy if elected.
The Property Council’s chief executive Ken Morrison said the coalition’s initiative is a smart proposal which helps first home buyers and provides some confidence for the housing construction sector.
“It will deliver some welcome assistance for aspiring first home buyers who have been confronted by the ever-increasing size of the deposit required to buy a home as the market has risen in recent years.
“Notwithstanding the current downturn, housing prices have risen much faster than average incomes, making it an increasingly tough challenge to save for a deposit especially for first home buyers.
“This isn’t a hand-out but a hand-up for first home buyers. They will still be required to be approved for loans and be able to repay them, but it should make it easier for first home buyers to take their first step towards home ownership by getting over that big deposit hurdle.
“It will also potentially be an additional stimulus for new housing construction which is one of the big engines of the economy and which has been looking at a significant downturn in activity.
“This scheme will help drive new housing projects once the current construction pipeline dries up, supporting jobs and housing supply.” Morrison said.
Australian Property Journal