The homebuilding boss says it is a myth that people need a 20 per cent deposit to get into a home.
Dale Alcock has hit out at critics of the federal government’s low deposit home loan scheme, saying it's a myth that people need a 20 per cent deposit to get into a home.
The new scheme, where first homebuyers can buy a property with a 5 per cent deposit, came into effect yesterday.
Under the policy, the federal government guarantees up to 15 per cent of the property’s value, which eliminates the need for buyers to pay mortgage lender’s insurance.
In Western Australia, the scheme is available for homes valued up to $850,000 in metropolitan areas and $600,000 in the regions.
The scheme has drawn criticism from parts of the industry, with commentary that it will lead to a rapid escalation in the cost of housing at a time the market is already under pressure.
ABN Group managing director Mr Alcock welcomed the federal government initiative, which he said closely resembled WA’s Keystart program.
“It’s interesting that this comes out and all of sudden there’s negativity about it,” he told Business News.
“This is what we’ve been doing in WA for the last 35 years with Keystart.
“It will be, in a sense … a competitor to Keystart in WA; it gives options.”
Under Keystart, first homebuyers in WA can buy a home with a 2 per cent deposit and avoid mortgage lender’s insurance.
The scheme has been operating for 35 years and has helped more than 125,000 people get into the property market.
Mr Alcock, who caters to first home buyers who want new detached houses, said it was a myth that first home buyers needed a 20 per cent deposit to buy a home.
“We’ve serviced that part of the market with key start through all the cycles over 30 plus years, and there’s no greater default on those home loans with a lower deposit than there is on standard mortgages," he said.
“A lot of very conservative people will say you need 20 per cent deposit, [but] it’s bulls***.
“Unless you’re going to … hand over 100 per cent and [be] a cash client, there’s always a risk.”
He added that while the scheme may add some pressure to the housing market, the sooner people could get onto the property ladder the better.
“My view is get them in there earlier, leave that open; aspirationally, it’s a good thing,” he said.
“This might add a little a little bit more pressure in the market, but hey, you’ve got to get it out there and keep this door open.
“So I’m supportive … but it doesn’t take away from the fact that state and federal government need to do a lot more to sort this housing crisis out.
“This is, in a way, pulling a demand lever, it’s not assisting in supply.”
Keystart chief executive Mark Tomasz said Keystart would monitor the rollout of the federal government’s scheme closely and look for ways its product could complement the initiative.
“For more than 35 years, Keystart has played a crucial role in helping Western Australians into a home of their own through our low 2 per cent deposit home loans,” he said.
“Keystart is committed to making the dream of an affordable home a reality for more people, and we’ll work alongside any initiative that helps Western Australians reach that goal.”
