Australia’s two leading bodies for the mortgage broking industry have responded positively towards the provisions to help people get onto the property ladder that were announced in last night’s Federal Budget.
The Mortgage & Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA) both released statements backing the move to assist single parents and First Home Buyers.
Among the headlines from the Budget was the creation of the Family Home Guarantee, a new scheme to help single parents to buy homes by dropping the amount of deposit to just 2%.
“For decades, the challenge for first home buyers has been the accumulation of the sizeable, required deposit,” said Mike Felton, CEO of the MFAA. “The New Home Guarantee addresses this in a practical way. Once Australians get into the market, they generally go from strength to strength whilst enjoying the security of homeownership, so we will always back measures that seek to assist people to get into their first home.”
“We also recognise the significant challenges that single parents face, which include finding and securing a family home. We’re pleased that this policy is targeted towards some of those in our society who need it most, and that previous relationships or homeownership will not impact the ability to access the Family Home Guarantee.”
Felton’s comments were echoed by Peter White, CEO of the FBAA, though he expressed some reservations about allowing borrowers to get into undue debt.
“Home ownership has become more difficult in recent times and this has a flow on effect across the economy, so these initiatives are urgently needed,” said White.
“One note of caution however: in extremely low interest rate environments that create soaring house prices, government incentives to enter the housing market with very little deposit mean that some people could end up with a negative equity position when interest rates rise again and property prices fall or correct.”
“Therefore, the FBAA still encourages people to save as much deposit as possible as this will leave borrowers in a far better position in the long term. However overall, our advice is to never leave it too long to enter the property market as prices will always keep rising in the long term.”