The Government’s new first home buyers scheme: here are the details
As of January 2020, the Federal Government’s proposed first home buyers scheme will officially launch and make its way into the public sphere.
Here’s the low down
The details of the proposal were recently announced, which will give up to 10,000 first home buyers the opportunity to purchase a property with only a 5 percent deposit. The scheme is aimed at low and middle income earners and operates on a first-come, first-served basis.
So what exactly are we likely to expect? Well, the new first home buyers scheme will see Sydney properties receive loan guarantees of up to $700,000, whilst the Government will offer $450,000 loans for the remainder of New South Wales. Elsewhere, qualified buyers in Melbourne purchasing property up to $600,000 will be allowed to access the scheme, while the rest of Victoria with be limited to $375,000.
Where did these price caps come from?
According to Finance Minister Mathias Cormann, the threshold for eligible property prices are determined by median house prices found within the capital cities and greater regional areas.
Corman went on to say that, "The price caps are calibrated to take into account median house prices and conditions in respective markets and indeed they are set with reference to the threshold for concessional arrangements for stamp duty in various states", and further stated that, "There is no specific number of guarantees per jurisdiction it will be on a … first-in, best-dressed basis.” He finished off by saying that, "Ultimately the scheme will be driven by demand, up to 10,000 guarantees a year."
Who will have access?
The proposal will be granted for owner-occupied home loans on a principal and interest terms, and is concentrated towards aiding Australians secure a “modest” dwelling. For instance, the scheme will be available for singles earning up to $125,000 annually, and for couples who earn less than $200,000 per year.
Senator Cormann stated that, “It’s really focused on helping first home buyers buy a modest first home”. And since the results of a CoreLogic study showed that during September, Sydney median house prices were valued at $805,000, when in Melbourne they came in at $635,000, a “modest” home won’t come cheap.
How will loans be given out?
According to Housing Minister Michael Sukkar, only two of Australia’s big four banks will be chosen to participate in the program. An entire 50% of the scheme’s loan guarantees will be allocated to smaller money lenders. Sukkar stated, "A lot of the smaller banks and regional financial institutions I think, by their very nature, will ensure there is good coverage across the country,".
We still don’t know everything
The leader of the Opposition, Anthony Albanese, has highlighted that its essential for the Government to finalise and announce the fine details post-haste as time was wearing thin. When the proposal for the scheme was first released by Prime Minister Scott Morrison during the last election campaign, Labor were quick to ensure they would do the same.
Mr Albanese went on to say that, "We still don't know which lenders will be involved and what the interest rates will be, and this is a scheme that is supposed to begin in two months".
He further urged that, "The Government really needs to get on top of the detail so that people can benefit from it.” Despite the criticism, the Opposition backed the proposed scheme, allowing legislation to pass in the beginning of October and will then be up for review in a year’s time.
Want to learn more?
If you’re curious to find out more about the first home buyers scheme, give us a call on 1300 930 106, and we can take you through the specifics.