Australians who access government-backed mortgage schemes will be slapped with hundreds of thousands of dollars in additional interest charges, rating agencies warn.
The fundamental cost-of-living measure to increase the number of spaces in the New Home Guarantee Program outlined in the federal budget will mean that buyers seeking access to the program to enter the housing market sooner will have to pay more. interest compared to someone who saved for a regular deposit.
According to RateCity’s calculations, someone buying at Canberra’s cap of $500,000 would incur $70,412 in extra interest on a 30-year loan, while a Sydneysider would face $112,659 in extra payments.
Indeed, a greater proportion of the size of the mortgage is earning interest compared to someone who entered the market with an 80% loan-to-value ratio, which is the traditional hurdle to waive the need mortgage insurance from lenders.
First-time buyers are also facing rising property prices in metropolitan and regional areas, with supply constraints a major factor fueling a 40% growth in home values in areas such as Newcastle and Launceston.
During Question Time, Prime Minister Scott Morrison was quizzed by Labor over comments he made on Wednesday that the best solution for tenants is to help them buy a house.
Labor leader Anthony Albanese called the Prime Minister’s ‘let them eat cake’ moment comment.
When responding to the dispatch, Mr Morrison returned the comments, saying he was referring to the specific housing program outlined in Tuesday’s budget.
“300,000 Australians have been able to get into their homes through the housing guarantee,” he said.
“The only housing policy [Labor had] was to increase the housing tax.
March figures from Areas The Rent Price Report shows rent prices rose 11.8% nationwide year on year.
In Canberra alone, the annual rent brings in 12.5% over a year.
On a quarterly basis, ACT rentals saw the strongest growth of 4.7%.
RateCity research director Sally Tindall said people considering taking up these schemes need to consider that they are taking on more debt compared to a normal loan.
“The larger your loan, the more interest you will pay the bank each month, which can potentially run into the tens or even hundreds of thousands of dollars, especially if you hold the loan for 30 years. rate, the impact of higher repayments will be magnified on a larger loan,” she said.
Ms Tindall noted that the draw card is earlier access to the market and the ability to start building a legacy asset, but warned that rate hikes and a drop in prices could impact the ability to repay a high debt mortgage loan.