At a time when the government has reduced the amount of cash support being given to first home buyers, either by reducing grants or limiting stamp duty concessions, RateCity’s Michelle Hutchison says there’s one program aimed at supporting saving that’s gone mostly unnoticed.
The First Home Savers Account Scheme, introduced by the Rudd government in 2008, gives account users an extra 17% bonus for the first $5000 contributed by the saver each year. When the government launched the scheme, it predicted 750,000 Aussies would use it save for their first home. Unfortunately, says Hutchison, those numbers have been ‘way, way off’.
New figures released by the Australian Prudential Regulation Authority (APRA) show that, up until December last year, 39,000 accounts had been opened – about 19 times fewer than initially predicted. The total balance of these accounts has grown to $401 million and the average balance is $10,282.
Hutchison says strict rules and ‘ignorance’ have been blamed for the low uptake of first home savers accounts and that, while there’s a number of things the government could look at to improve the scheme – most notably around reducing the paperwork burden – there’s also an opportunity for the major banks to come to the party.
“Right now only ten institutions offer these accounts – and none of the big four banks.”
Since roughly 92% of Australians choose to bank with the majors, it’s therefore unsurprising that many potential borrowers haven’t heard of them.
Hutchison says institutions could benefit from offering these accounts and not just in terms of the good PR that comes with supporting first home buyers.
“These accounts could help institutions market home loans to prospective customers. Savers aren’t likely to switch accounts and their bank will have the inside track to offer a home loan to them when they are ready to buy.”