Higher-earning Australians flocking to 5% first home deposit scheme with some borrowers earning over $200,000
Summary
Many first-time home buyers in Australia are using a government program that lets them buy homes with just a 5% deposit. Since the program removed income limits last year, a large number of higher earners, including those making over $200,000, have been able to use it. Economists say this has pushed up home prices because it increased the spending power of buyers who would have purchased homes anyway.Key Facts
- The government’s 5% deposit scheme allows first home buyers to borrow 95% of a home's price with government help on mortgage insurance.
- The income limits for the scheme were removed last year, allowing higher earners to use it.
- From October to April, about 40,000 loans were backed by the government under this scheme.
- More than 13,900 of these loans were to people earning above the previous income caps ($125,000 for singles, $200,000 for couples).
- Nearly 1,000 single borrowers earned $200,000 or more, and over 1,200 couples earned $275,000 or more and used the scheme.
- Higher earners using the scheme may have contributed to rising home prices by increasing buyer demand.
- The scheme’s expansion increased the maximum home prices eligible for the program to over $1 million in some cities.
- The average number of first home buyer loans increased only slightly after the scheme expanded, and overall first home buyer activity has recently dropped as the housing market slows.
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