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Latest home loan scheme will fail to impact - Urban Money

Latest home loan scheme will fail to impact

The Australian Government recently announced a new program called the Family Home Guarantee, which provides eligible single parents with dependants the opportunity to build a new home or purchase an existing home with a deposit of 2 per cent, subject to the individual’s ability to service a home loan.

From 1 July 2021, 10,000 Family Home Guarantees will be made available over four financial years.

BUT…

As the detail arrived, we realised that only 2 homes in the Launceston region would likely be eligible for the scheme due to the low maximum property values allowed at $300,000.

In a market that’s already hot, even a home advertised at offers over $270,000 is likely to sell at over $300,000. In Hobart, the maximum value is $400,000. Again, drastically reducing how many homes there are to choose from.

Other issues include that Tasmanians earn on average 13% less than interstate counterparts, and that a purchasers borrowing capacity, while it’s good that they will be spared the lenders mortgage insurance, will still be assessed on their ability to service repayments of 98% of the loan.

Our request?

Consultation on these types of schemes with brokers who are on the side of the customer (rather than lenders who are looking after their own interests) would be helpful toward creating policies and schemes that could make the impact they intended. It’s going to be a combined effort at all government levels to help close the gap because different schemes will help different people in different circumstances.

For example at Federal level on this policy…

  • The Launceston cap lifted to $350,000 so there would be 10 more properties to choose from based on today’s property market, which actually makes the scheme worthwhile. If lifted to $400,000 there would be more property options. This does however have the risk of pushing home prices up more, continuing the vicious cycle.

  • More incentives for smaller, practical homes to be built to take the heat out of lower end of the market rather than fuelling schemes that pushed builders toward renovations on existing properties – this ultimately has contributed to a builders shortage to build new homes for those who critically need them.

At State level here in Tasmania…

  • The Homeshare scheme needs to be reviewed to open up competition as it’s currently only with one single lender. It’s a great scheme but it shouldn’t reduce the choices of home buyers to get the best deal.

  • More land released at state level so we can see more affordable homes built.

So for now, we’d love to see the numbers lifted on the Family Guarantee. Let’s get more people into their first home. Because a permanent home is more than just bricks and mortar.

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