The First Home Loan Deposit Scheme will help first home buyers enter the property market sooner, by providing a Government guarantee that will allow first home buyers to purchase a home with a deposit as low as 5%.
The Coalition Government passed new laws through Parliament this week to implement the First Home Loan Deposit Scheme, which is expected to kick off on 1 January 2020 and will support 10,000 first home buyers on low and middle incomes each financial year.
In a joint statement with Minister for Housing and Assistant Treasurer Michael Sukkar, Treasurer Josh Frydenberg said the passage of the scheme will “facilitate earlier access to home ownership for first home buyers”.
“The Government recognises that saving a deposit has become a more significant barrier to entering the housing market. It can take ten years for the average first home buyer to save a 20% deposit.”
Chief Executive of the Property Council of Australia, Ken Morrison, said the new first home loan scheme will not only make it easier for first home buyers to get into the market, but it will also provide timely stimulus for housing and construction supply.
“The current ‘deposit gap’ has been a big hurdle for many first home buyers and adds to the time they need to spend saving to meet the lenders deposit requirements or purchase expensive mortgage insurance,” Mr Morrison said.
“The First Home Loan Deposit Scheme reduces these barriers to entry for up to 10,000 first home buyers every year, and boosts support for construction sector jobs, helping to drive economic growth at a critical time.”
The Bill, first introduced into the House of Representatives on September 12 and the Senate on September 18, was passed by both houses this week.