Prime Minister Scott Morrison has announced a new plan that aims to help first home buyers, which the Labor party has matched.
The First Home Loan Deposit Scheme will mean first home buyers will only need a five per cent deposit instead of 20 per cent.
The policy is expected to cost around $500 million in the form of equity through the National Housing Finance and Investment Corporation.
“Getting into the housing market is a point of pride for Australians and a rite of passage. It requires hard work and even harder saving, but we want to make it that bit easier,” Morrison said.
“The First Home Loan Deposit Scheme, which will start on 1 January next year, will be targeted towards first home buyers earning up to $125,000 annually or $200,000 for couples.
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“The National Housing Finance and Investment Corporation will partner with private lenders to deliver the First Home Loan Deposit Scheme, prioritising smaller lenders to boost competition,” he said.
Shadow Treasurer Chris Bowen said the Labor party would match this commitment.
Master Builders Australia CEO Denita Wawn has backed the scheme and said it will be a boost for both first home buyers and residential builders worried about the declining housing market.
“For many aspiring First Home Buyers it is the deposit gap rather than the size of mortgage payments that is the real barrier to home ownership and we think the First Home Deposit Scheme will help them overcome it,” Wawn said.
“The measure will be welcomed by home builders and tradies who are facing a softening housing conditions which are down by as much as 30 per cent in some markets.
“A stronger building industry means a strong economy and this measure will provide some stimulus for the housing market at just the right time,” she said.