Comments by Peter White AM, Managing Director of the Finance Brokers Association of Australia (FBAA)

Re: Federal Government and Opposition housing policy announcements

“The FBAA supports workable and sound measures and policies that will remove unnecessary barriers for people to enter the housing market. We commend both major parties for prioritising this in their policies and for their innovative announcements which we support in principle.”

Policies should also help existing borrowers

“While these announcements should positively impact first home buyers, we must also recognise that they do not directly help the much larger percentage of people who are existing mortgage holders.

“It is important that policies don’t just help new borrowers enter the market, but existing borrowers to stay in the market and retain their homes.

“We’d like to see practical assistance for existing borrowers, so they can more easily refinance and access lower interest rates. The FBAA has consistently called for a reduction in the buffer rate, which we note is now an election commitment of the Opposition, as this will assist all borrowers.

“If existing borrowers end up leaving the market due to cost of living pressures and an unrealistic serviceability assessment rate, they will put pressure on the rental market from the back-end, possibly negating the new home buyers on the front-end.”

Housing costs may rise

“We also agree with the concerns of many economists that these – albeit positive – initiatives, along with predicted and much-needed interest rate reductions, may increase housing costs. While this is a positive for existing homeowners, it may have the effect of cancelling out some of the benefits for first home buyers, due to them needing a greater deposit and being unable to meet credit criteria.

“All sides of politics must consider the long-term impacts and create policies that bring long-term benefits, not just focus on the short-term.”

Caution on 5 per cent deposit initiative

“As a word of caution, while it is a positive move to enable first home buyers to access a mortgage for a 5 per cent deposit and pay no LMI, there are complexities that may impact the ability of lenders to provide these loans to all applicants. Lenders need to meet responsible lending obligations and a deposit is evidence of the borrower’s ability to service the loan. It must also be pointed out that a portion of the deposit goes to up-front costs.

“Further impacting a lender’s ability to provide low deposit loans that are part of a government-backed scheme is their capacity to securitise their mortgage portfolio. This need may result in lenders capping the number of this type of loan they are willing or able to provide.”

What FBAA wants to see

“The FBAA will always advocate for Australian borrowers, and finance and mortgage brokers are the primary drivers of competition. Because we are obligated to act in the best interests of our customers, we want to see government policy that helps all borrowers into the future, while ensuring that they can genuinely afford to service their loans.”