First-home buyers using government deposit scheme to pay thousands in extra interest

But a 5 per cent deposit on the same property would be $25,000, forcing the buyer to borrow $475,000. Over the life of that loan, they would pay $57,000 more in interest than someone with a 20 per cent deposit.

Mr Fraser, who also chaired ME Bank after running the RBA between 1989 and 1996, said the banks' current caution would protect borrowers. IFM Investors' Alex Joiner warns the Coalition's housing plan will leave vulnerable first time buyers with more debt and bigger interest bills.He said the Coalition's plan, which was matched by Labor leader Bill Shorten within two hours of being announced on Sunday, would actually load up debt on people who were not in a solid financial position to take it on.

but said it would mean less young Australians need to ask the "bank of mum and dad" for the cash. He has already flagged that the policy could be expanded if there was strong demand.Grattan Institute fellow Brendan Coates said in its current form, capped at 10,000 entrants a year, the policy would have almost no impact but warned any expansion could actually make the situation more difficult for first time buyers.

swrighteconomy ...never catch a falling knife no matter the incentive to do so; we're nowhere near the bottom - patience is a virtue...

swrighteconomy And you only pay interest on what you borrow. How biased is this article

swrighteconomy it's a scheme offered up by BOTH the coalition and the ALP

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Govt’s first home buyers scheme comes with ‘huge risk’: William Bourke | Sky News AustraliaThe government’s newly-announced first home buyers scheme comes with ‘huge risk’, according to the founder of the Sustainable Australia Party, William Bourke.\n\nThe Coalition's policy, which has been matched by Labor, would allow people to buy a home with just a five per cent deposit.\n\nMr Bourke says as the housing market flatlines, the guarantee could create a debt trap, with that debt then falling back on the taxpayer.\n\nThe minor party leader told Sky News that politicians are sending ‘very mixed messages’ with their housing policies, as they are legislating for affordable housing while simultaneously trying to boost housing prices.\n\nImage: News Corp Australia\n\n\n\n\n Who? Great to see they are getting more publicity , they are the only party willing to tackle our lack of policy on population growth & given all the climate change talk, health care issues its ridiculous no oneelse is brave enough to address our world beating population growth Banks aren't going to lend to people who don't pass their affordability criteria no matter how low the deposit is. All this will do is get people who can afford a home loan into the market quicker. Hardly a 'huge risk'
Source: SkyNewsAust - 🏆 7. / 78 Read more »