First home buyers missing out on millions in savings

by 17 Feb 2014

CANSTAR chief commentator Steve Mickenbecker says almost twice as many first homebuyers purchased a property in 2013 as there are First Home Saver accounts in existence.

For struggling first homebuyers in a booming market, those benefits could be the difference between getting a foothold in the property market, or not, says Mickenbecker.

“APRA statistics indicate that there are currently around 45,300 First Home Saver accounts in existence, yet in 2013 alone, ABS statistics indicate that more than 82,000 residential home loans were approved for first homebuyers,” he says.

“For someone on an average tax rate and contributing $6,000 in savings each year, that equates to lost money of up to $5,100 in government handouts and $900 in tax savings over five years.

“Over ten years, that amount is amplified. If just half of last year’s first home buyers had started a First Home Saver account when they were introduced - and saved regularly - their collective buying power may have been boosted by an extra $246 million.

“Obviously a First Home Saver account won’t be appropriate for everyone, but it is certainly something that more would-be first buyers should consider.”

With interest rates between FHS accounts varying substantially, brokers can help clients shop around for the best deal, says Mickenbecker.

“Currently on our database, the maximum rate of interest being paid is 4.15% while the lowest is 2.25%.

“In our low interest rate environment, that’s a significant difference.”