Coalition's "first home loan deposit scheme"

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

 

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

 

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

 

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.

 

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

 

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?

 

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.

 

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

 

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

 

Bill Shorten AKA 'Santa Clause' ...

 

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

 

@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.