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National Finance and Investment Corporation Amendment 2019 (First Home Buyers Deposit Scheme)
This bill introduces amendments to the National Housing Finance and Investment Corporation Act 2018 to implement the First Home Loan Deposit Scheme and establish a new research function within the National Housing Finance and Investment Corporation.
The bill expands the National Housing Finance and Investment Corporation’s functions to enable it to provide guarantees to improve access to home ownership, and undertake research into housing affordability, including supply and demand.
It has become increasingly challenging for first home buyers to save for a deposit to purchase their first home, despite their ability to service the loan, especially given historically low interest rates and relatively high housing price-to-income ratios.
Based on median household income and a 15 per cent saving rate (on before-tax income), it takes approximately eight years to save a 20 per cent deposit on a median priced home.
That is why the government is backing first home buyers through the First Home Loan Deposit Scheme. The First Home Loan Deposit Scheme is designed to facilitate earlier access to home ownership for first home buyers—importantly, including those in rural and regional Australia.
The government will provide direction on the operation of the First Home Loan Deposit Scheme and the research function component through an expansion of the National Housing Finance and Investment Corporation’s investment mandate. The investment mandate will include details of the First Home Loan Deposit Scheme, such as the relevant eligibility requirements.
As announced by the Prime Minister during the election campaign, from 1 January 2020 eligible first home buyers will be able to enter the housing market sooner. Up to 10,000 guarantees per year will allow eligible first home buyers to purchase a home with a deposit of as little as five per cent.
Applicants will be subject to a range of eligibility criteria, including taxable incomes of up to $125,000 per annum for singles and up to $200,000 per annum for couples in the previous year, they must be Australian citizens purchasing property in Australia and they must be taking out owner-occupied loans on a principal and interest basis.
Properties purchased under the First Home Loan Deposit Scheme will be subject to regional price caps. Regional price caps will be set with a view to ensuring equitable access to the scheme across Australia.
The coverage of the guarantee will be broadly consistent with parental guarantee products offered by some lenders. The guarantee will remain in place until a loan is refinanced or the outstanding loan balance falls below 80 per cent of the property purchase price—whichever comes first.
Access to the First Home Loan Deposit Scheme will occur as part of the normal home loan application process, with limited additional effort for first home buyers being required when seeking a guaranteed loan.
In addition to its role in administering the First Home Loan Deposit Scheme, the National Housing Finance and Investment Corporation will take on an important new research function to examine housing demand, supply and affordability in Australia. The National Housing Finance and Investment Corporation will establish close relationships with other research organisations to ensure its research efforts on housing affordability are focused where they are most needed and that they complement existing housing related research.
The First Home Loan Deposit Scheme and new research function are intended to complement other existing measures the government has taken to reduce pressure on housing affordability including the First Home Super Saver Scheme, announced in 2017, which assists individuals to build a deposit for a first home inside their superannuation fund through voluntary contributions. This is in addition to other measures the government has implemented to improve housing affordability such as our City Deals, encouraging additional supply of dwellings, importantly. These measures combined with the First Home Loan Deposit Scheme’s role in reducing the hurdle involved in putting together a sufficient deposit without the need, importantly, for lenders mortgage insurance will go a long way to help make the dreams of first home buyers a reality sooner.
Full details of the measure are contained in the explanatory memorandum. I commend the bill to the House.
Click here to access a PDF transcript of the Hansard extract of this speech.