Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move Greens amendment (1) on sheet 1302:

(1) Schedule 2, page 5 (after line 8), at the end of the Schedule, add:

2 At the end of section 51

Add:

Limit on guarantee

(4) The Commonwealth must not guarantee a loan for which the deposit paid by the borrower or borrowers is less than 5 per cent of the value of the residential property.

I spoke about this amendment in my speech in the second reading debate.

Jenny McAllister (NSW, Australian Labor Party, Shadow Cabinet Secretary) Share this | Link to this | Hansard source

Labor does not support the amendment proposed by the Greens. The two per cent threshold contained in this proposal is very similar to programs that have worked well for years, like Keystart in Western Australia. Borrowers will need to qualify for this program under the thresholds for bank lending and credit history to show that they do have the capacity to service the loan. Increasing the threshold would lock out those who would otherwise qualify and would have little effect on preventing mortgage stress. This measure provides a guarantee so that costly mortgage insurance is not required, and a deposit of only two per cent is required for eligible participants.

Many single parents have sound credit histories. This would reward that, ensuring they could gain access to homeownership without needing a prohibitive level of deposit. Raising this to five per cent would slow down and impede access for those people. This scheme should be expanded so that more people qualify, not fewer.

Jane Hume (Victoria, Liberal Party, Minister for Superannuation, Financial Services and the Digital Economy) Share this | Link to this | Hansard source

The government will also be opposing this Greens amendment. The family home guarantee will allow eligible single parents to purchase a new or existing home with a deposit of as little as two per cent, because this will establish a pathway to homeownership for single parents with dependants who have struggled to save a deposit while renting or restarting their lives following a relationship breakdown. The deposit challenge is even harder when you're on a single income and raising children, particularly if you're not eligible for first home buyer programs.

As with all home loans, regardless of the size of the deposit, a lender will only extend a loan of this nature to a borrower who has the capacity to service it. This means that credit providers, when undertaking their serviceability assessments to determine a consumer's borrowing capacity with a deposit of as little as two per cent, must consider whether the consumer can repay the loan without going into substantial hardship.