We discuss the Coalition plans for first time buyers. As expected. Sound of can being kicked down the road! Remember such incentives lift prices, and will “bribe” people into a falling market.
One of the new announcements in today’s launch was the Coalition’s commitment to helping first home buyers save for a deposit sooner by lowering the required deposit from about 20 per cent to 5 per cent.
At the moment above 70% or 80% borrowers at the moment would need to purchase expensive Lenders Mortgage Insurance.
Today the Coalition announced a scheme, where eligible first home buyers would not have to pay mortgage insurance and instead, the Government would guarantee the difference between that lower deposit (down to 5 per cent) and the industry standard (about 20 per cent).
The First Home Loan Deposit Scheme, will be available from January 1 for those who have saved at least 5 per cent of the value of the home, but it will also be subject to limits for each market
The full details of the scheme have not yet been released, but Mr Morrison said it was aimed at allowing people to get onto the property ladder sooner.
The Labor Party has responded by promising to match the Coalition proposal.
“We back genuine support for first home buyers — that’s why we are also reforming negative gearing for future purchases, so young Australians don’t have to keeping losing out to wealthy property speculators,” Shadow Treasurer Chris Bowen said.
After six years of failure, and six days before an election, the Liberals are desperately trying to tell young Australians they understand their struggles to buy their first home,”
The government proposal is a significant departure from previous attempts to help younger people trying to get into the housing market, requiring $500 million in guarantees and possibly more over time.
But it will not be open-ended. The government intends to borrow $500 million so it can invest the money in the National Housing Finance and Investment Corporation, which would offer the guarantees to aspiring home-owners.
The $500 million cost of the policy does not deepen the budget deficit or weaken future surplus for either major party. As an investment, it will be treated as a capital item rather than expenditure.
The scheme would be capped at 10,000 loans every year, about one tenth of the market given estimates that there were about 100,000 loans to first-home buyers last year.
The scheme will be available to first home buyers with an income of up to $125,000 or a couple with $200,000 where they are both first-home buyers.
So, lets encourage first time buyers to come into a falling market, and loose their equity some more.
