Coalition's "first home loan deposit scheme"

Discussion in 'Politics' started by LibGS, 12th May, 2019.

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  1. LibGS

    LibGS Well-Known Member

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    Just a week ago, the Coalition was accusing Bill Shorten of being a communist for his plan to subsidise the wages of childcare workers.

    But today they are happy to subsidise first home buyers.

    “That would include guaranteeing, to approved applicants, the additional loan amount taken out by the first-home buyer to cover the difference between the lower deposit of, say, 5 per cent and 20 per cent of the value of that property,” Mr Morrison said.

    https://www.theage.com.au/federal-e...ower-deposit-requirement-20190512-p51mha.html
     
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  2. Lizzie

    Lizzie Well-Known Member

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    Not a fan. Way better to remove stamp duty, but that is state and their main money earner, so can't see it going
     
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  3. geoffw

    geoffw Moderator Staff Member

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    Labor has said that they are going to match it.
     
  4. LibGS

    LibGS Well-Known Member

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    Disaster. Libs know they will lose and are laying traps hoping Labor will match them and then implement these poison pills.
     
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  5. TSK

    TSK Well-Known Member

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    I think you're giving them too much credit there. If they match it, they can put in place similar rules around credit as the banks...last thing labor wants is thousands of homes which are worth less than the loan.
     
  6. LibGS

    LibGS Well-Known Member

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    You might be right. But there is commentary that they are doing deals with potential senators to block block block. This will be "interesting".
     
  7. geoffw

    geoffw Moderator Staff Member

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    There was a report today that 10,000 new home buyers would benefit, out of 100,000 new home buyers in total. The response from ScoMo, who didn't deny the figure of 10,000, was that it would be means tested, to couples earning below $200,000 and singles earning below $125,000.

    Does that mean that 90% of new home buyers have a combined income over $200k? The median Australian household income is $75k, and that's not just new home buyers.
     
  8. Scott No Mates

    Scott No Mates Well-Known Member

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    It's a trap for young players/poisoned chalis (having listened to Steve Koukoulis on ABC this morning - my words not his).

    The current market direction is not up, what is going to happen when new players buy into a falling market (how many around the country are rising at present?) and by next year all of their equity has evaporated?

    What sort of loan can you get with $125k/$200k income without other assets?
     
  9. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Roughly as much as $760k for an individual on $125k and almost $1.3M for a couple jointly earning $100k each. Lots of assumptions in this, it's probably well on the generous side. Other assets are irrelevant if lenders recognise the governments' offer of security.

    Those are fairly big numbers so like all past government incentives, this is likely to have the opposite affect to increasing affordability. If enough people can access it then demand increases and prices go up. Like the first home buyers grant and the stamp duty waivers, it only means less deposit is required, making it easy for more people to buy, resulting in a surge in prices in certain markets. Net result is an increase in prices.

    And you're right. Negative effective equity is going to be a very real thing.


    So far these 'election promises' are just that. Little more than random statements without any real consideration to the implementation. Has treasury been consulted, what does APRA, ASIC & the RBA think of this? Will they allow banks to participate?

    I recall that the past first home owners deposit scheme and super scheme actually got more planning and never really went anywhere.

    It's really about time governments from both sides recognised that housing prices aren't going to be solved by these sorts of schemes. Our housing affordability crisis took 20-30 years to get where it is today. It's not something you fix in an election cycle with a few schemes. This only makes the problem worse.

    What's really needed is long term investment in diversification of housing, employment and connectivity infrastructure. There's plenty of affordable housing all over the country, just nobody wants to live there. Get people out of the biggest cities by giving them employment and lifestyle. This isn't something you can solve in a few years or even a decade. It will take a generation or two.
     
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  10. geoffw

    geoffw Moderator Staff Member

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    So should a government be supporting house prices to help those with houses, or supporting action (say negative gearing changes) which may depress prices, helping new home buyers while hurting existing owners?

    ScoMo today stated that Labor's proposed changes would hurt new borrowers because it would lead to dropping house prices. That may be the case in the longer term after people are already in the market, although in the short term it would only make it harder to get into the market.
     
  11. PandS

    PandS Well-Known Member

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    down turn start to show up on banks profit, CBA the bigs boys profit down grade, pocket of stress and some experience hardship.

    This could go down in our history like many other countries before it, debt fuel boom
     
  12. PandS

    PandS Well-Known Member

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    I favour a good big correction to weed out the weak so we can have another boom down the track, I will get temporary hit but I will be able to snapped up more for the next boom
     
  13. balwoges

    balwoges Well-Known Member

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    Bill Shorten AKA 'Santa Clause' ... :D
     
  14. Lizzie

    Lizzie Well-Known Member

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    According to Mr Frydenburg - on ABC AM - they haven't consulted with the banks, APRA etc. Sabra gave him a real shrift about this, and so she should.

    I was flabbergast it was to people earning less than $125k (or 200k combined) ... if you can't save a 20% deposit on $200k to buy "something" then maybe you're the problem, not the housing industry ... and then again, if you're on under $100k combined, can you really afford a mortgage?

    I really can't see it being advantageous either way

    First home deposit guarantee "not big government": Frydenberg
     
  15. Redwing

    Redwing Well-Known Member

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    @Lizzie

    Just read this

    When Scott Morrison unveiled a surprise election commitment to help first home buyers get a loan with a low deposit, it sent shivers down the spine of Australia's former top banking regulator Jeffrey Carmichael.

    "We have worked hard over the years to get the government out of financial services, for the simple reason that they are simply not very good at it," says Carmichael, the first head of the Australian Prudential Regulation Authority until 2003.


    Government meddling in the housing market is a slippery slope, as the experience in the United States shows.
     
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