ScoMo’s $50k pitch for first-home buyers
QUEENSLAND first-home buyers are set to save more than $50,000 on mortgage insurance over the life of a 30-year loan under the Coalition's proposed home buyer plan.
Experts say the loan deposit scheme, which is also supported by Labor, will have a limited impact on housing prices, but a major impact on the ability of low-medium income earners to enter the property market.
Under the plan, announced by Prime Minister Scott Morrison on Sunday, the Government will allow first-home buyers who have saved a deposit of at least 5 per cent access to a loan without the need for lenders' mortgage insurance.
The Government will act as a guarantor on these loans, essentially underwriting the risk.
Mr Morrison said, while the scheme was currently being made available to 10,000 out of the estimated 112,000 first-home buyers each year, it could be expanded.
"If there is a greater demand for this scheme, we will be in a position to meet that demand," he said.
"I'd like to see more people on the first rung of the property ladder to realise their aspirations."
Mr Morrison said the policy would encourage smaller banks to lend to first-home buyers, rather than the big four.
"We'll be giving priority to those smaller banks and those non-bank lenders so we can encourage more competition in the market, he said yesterday.
Modelling by the Housing Industry Association shows that a Brisbane couple with a joint income of $160,000 who take out a loan to buy their first home for $560,000 would save more than $50,000 in mortgage insurance fees over the life of the 30-year loan.
"The amount of time to save a deposit would be reduced from 6.74 years to 2.39 years … and they would save $51,692 over the course of the loan," HIA principal economist Tim Reardon told The Courier-Mail.
Mr Reardon said mortgage insurance was a huge cost for first-home buyers who typically borrow more than 80 per cent of the cost of their home.
Lenders mortgage insurance provider Genworth - which wrote 60,000 policies in Australia last year - says the policy will have little impact on its business.
"The scheme … is targeting a niche part of the market and has a number of restrictions. It is capped at 10,000 loans per annum and available only to first-home buyers," chief executive Georgette Nicholas said.
Investment bank UBS economist George Tharenou said the new policy could add up to $3 billion to home loan demand each year, but this was about 1 per cent of the $227 billion in home loans written.