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The government has been criticised for leaving first home buyers in the dark after rushing through its new loan deposit scheme.
From the start of 2020, 10,000 aspiring home owners will be able to get on the property ladder with as little as 5 per cent deposit towards their first house.
It is part of the government’s First Home Loan Deposit Scheme, and 27 lenders have been approved for the scheme.
One mortgage broker company believes first-time home buyers have been left in the dark about the policy’s details, with less than two weeks until it begins.
“The scheme was first announced during the election, but it seems the policy is only now being developed when it is due to start on 1 January,” Zippy Financial director Louisa Sanghera said.
“It does seem like the policy has been rushed and not been properly thought through.”
Mortgage brokers have also struggled to understand the finer details of the scheme, including why only 27 lenders were taking part.
“By restricting the scheme to 27 banks, they are reducing competition, which will potentially mean higher interest rates for the type of buyers who are struggling with housing affordability the most,” Ms Sanghera said.
“The selection of lenders has also not been transparent, because I can’t find any information on which banks applied to be a part of this scheme, who was declined or why.”
She pointed out some of the regional lenders who have been appointed will be of no help to buyers in the big cities.
“Many of the lenders are also not available on mortgage brokers’ panels, even though brokers write about 65 per cent of mortgages in Australia, so we have no access to them,” she said.
“How can restricted access to all banks be a good outcome for everyday Australians trying to get into the housing market? How has ASIC even approved this scheme?”
The small amount of competition only makes the process of buying your first home more stressful. They would have to deal directly with the banks as a result of the limited access to brokers in the scheme, Ms Sanghera said.
“If first home buyers don’t use a broker, they’ll have to go through the maze of paperwork and compliance information required to obtain a loan by themselves, which will ultimately make the process much more difficult and stressful for them,” she said.
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