Australia unveils first home buyers’ scheme

Prime Minister Morrison aims to boost home ownership

Australia will be allowing first-time home buyers under certain income thresholds to take out home loans at low interest rates, News.com.au reported.

Individuals who earn AUD125,000 (USD87,300) and couples who earn AUD200,000 can gain access to the loans, with the caveat that they can deposit at least five percent of the value of their homes, Prime Minister Scott Morrison announced.

“It is not getting easier. We want to help make the dreams of first homebuyers a reality. So we have decided to go further at this election.”

The scheme will be made possible with AUD500 million of equity set aside by way of the National Housing Finance and Investment Corporation, guaranteeing loans for up to a value of 20 percent of the home.

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“We need to go further. It’s hard to save for a deposit. Especially with the banks pulling back and larger deposits of 20 percent now being standard,” he said.

Buyers are expected to save around USD10,000 by being exempted from lenders’ mortgage insurance.

The policy will cut the time taken to save for a deposit “by at least half,” Morrison estimated. “They don’t have to wait so long to build that 20 percent deposit, but to get there sooner, quicker, and therefore be able to start paying off that loan and building their equity.”

Lenders will still do all the “normal checks” as to keep the policy from doling out “free money”, he said.

The scheme is limited to 10,000 first home buyers or one in 10 of the 110,000 Australians who bought their first home last year.