Federal Home Guarantee Scheme expands October, but questions remain about affordability

ABC NEWS (Australia)

The Federal Home Guarantee Scheme is expanding from October the first, but just how many will be able to afford to buy in? Income limits have been abolished and the price caps lifted to a million dollars or more in some cases.

Transcript

00:00This year, the average price of a house in Australia passed the million-dollar mark.

00:07So the Federal Government decided to change its home guarantee scheme, hiking price caps.

00:13Anyone can now qualify, no matter what they earn, they just need a 5% deposit

00:18and the Government will go guarantor for 15%, skipping the need for lenders, mortgage, insurance.

00:25Well, some people will get into homes sooner than they might otherwise have been able to.

00:31For those who aren't able to arrange their affairs to take this scheme up,

00:34the result will be that it becomes even harder for them.

00:38The ABC asked Australia's financial comparison site CanStar to crunch the numbers

00:44with borrowings at an interest rate of 5.5%.

00:48And they're a bit scary.

00:49CanStar found buying a property at the new price ceiling out of reach for single-income earners in every major city.

00:57Look at Sydney, for example.

00:59The borrower would need to earn more than $260,000 a year to afford the loan,

01:04with repayments of around $2,000 a week.

01:08For Brisbane, the income needs to hit the $170,000 mark, bringing repayments to nearly $1,400 a week.

01:16And for Melbourne, a single earner wages needs to be around $160,000, repayments $1,200 a week.

01:25For many people, it is just not affordable.

01:28Unfortunately, they have to start with a much lower priced property.

01:33For couples, CanStar found they would also be priced out of Sydney or Melbourne

01:38at the maximum limits due to low wages.

01:41However, they could afford to buy in all other major cities.

01:44But it is a one-off sugar hit because property prices are likely to rise

01:49on the back of the uncapping of this scheme.

01:51It's a case of do your sums and don't over commit.

01:54I'll see you next time.

01:55Bye.

01:56Bye.

01:57Bye.

01:58Bye.

01:59Bye.

02:00Bye.

02:01Bye.

02:02Bye.

02:03Bye.

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