A South Australian mortgage head hopes speculation that the successful HomeStart Finance business will be sold off to meet state budget shortfalls does not come true.
There has been recent conjecture that HomeStart, which has a loan book of $1.96 billion, is being prepared for a sell-off.
HomeStart, whose lending is financed by the SA Government Financing Authority, made an operating profit of $16.4 million in 2012-13, but its loan book shrank to $1.96 billion from $1.97 billion in 2011-12 in a tricky local real estate market.
Any announcement of a sale will come with Thursday’s state budget, although South Australian Treasurer Tom Koutsantonis has reportedly ruled out a sale.
In the run-up to the state election, SA was forecasting a record deficit of $1.02 billion for 2013-14 and a deficit of $576 million in 2014-15.
But Bernie Lewis Home Loans managing director Mark Lewis does not believe the government will sell off HomeStart, as it remains profitable.
“It still returns a profit and it’s a valuable service for people on lower incomes to get a leg on to the home ownership ladder,” he tells Australian Broker.
HomeStart was created in 1989 by the Bannon government in response to the high interest rates at that time, and its successful model has been copied by other state governments – such as KeyStart in Western Australia.
“It helps reduce pressure on public housing. I honestly don’t know why they are considering selling it off,” Lewis says.
As well as watching for a HomeStart announcement, Lewis will be keeping a close eye on other state budget news on Thursday – such as any relief for first home buyers.
The current first home buyer incentive runs out on 1 June, and the government has been keeping surprisingly schtum on any subsequent relief – something Lewis thinks suspicious.
“They’re being unusually quiet on that front. Normally if they’re planning something, news will be leaked or there’ll be some discussion on it, but I haven’t heard any mention,” he says.
“I do hope they have something, because there must be a bottom-up approach. We need first home buyers to help everything else tick along. Scrapping first home buyer schemes might save the government some money in the short term but it’s not beneficial in the long term.”
Meanwhile, the NSW government has announced it will extend the state’s first home owner grant.
First-time buyers who purchase new properties – houses or apartments – worth up to $750,000 will now qualify for the $15,000 payment.
The previous threshold had been $650,000, since the June 2012 budget.
The threshold decision brings NSW into line with several other states and territories.
In Victoria first home buyers qualify for the $10,000 First Home Bonus, but the value of the property must not exceed $750,000. Eligible recipients also qualify for a reduction of up to 40% on stamp duty payable on first homes purchased below $600,000.
Queensland's Great Start Grant valued at $15,000 is paid to first home buyers who are buying or building a new home valued up to $750,000.
REINSW president Malcolm Gunning says the key to a thriving property market is to help those who need it most.
“It is important to support those who are investing in their first home, as well as retirees who are looking to downsize,” he says.
“Restricting first homebuyers to new properties limits their options and choices, making it even more unaffordable for many to acquire a home.”
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