PHOTO: First Home Loan Deposit Scheme
It was a scheme designed to give young Aussies a helping hand. But banks are allegedly devising a sneaky and “unfair” tactic to undo it.
Just before the May election, Prime Minister Scott Morrison revealed a bold new plan designed to help young first-home buyers.
Under the PM’s $500 million First Home Loan Deposit Scheme – due to be rolled out on January 1 – 10,000 eligible borrowers will be able to get their foot in the door earlier.
At the moment, buyers usually need a 20 per cent deposit to avoid paying mortgage insurance.
But under the Coalition’s scheme, participants would only need a 5 per cent deposit, with the Government guaranteeing the rest and covering the mortgage insurance under a special loan.
It will be limited to properties under $700,000 in Sydney, $600,000 in Melbourne and even less in other areas and to single Aussies with an annual income of up to $125,000 or $200,000 for couples.
But an explosive Australian Financial Review article published yesterday revealed our financial institutions are allegedly considering hiking up interest rates for first-home buyers who use the scheme.
“Big banks are seeking the flexibility to charge higher interest rates under the Morrison Government’s scheme to help first-home buyers because of the increased risk of lending to first-time borrowers with as little as 5 per cent deposit.,” reporter John Kehoe wrote.
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