First-homebuyers struggling to get a loan will be given easier access to the State Government’s low-income lender as part of efforts to boost WA’s ailing housing market.
In a key measure to be outlined in next week’s State Budget, Premier Mark McGowan confirmed the Government would relax the eligibility criteria for borrowing money from Keystart.
The decision comes amid a clamp-down by the major banks on lending in the wake of the Hayne royal commission and with WA’s housing industry “on its knees” according to the Master Builders’ Association.
Keystart is a government-owned agency that lends to lower income earners who might have difficulty getting a home loan approved by a big bank.
Almost 13,000 loans have been written over the past five years by the lender, which offers a standard variable interest rate based on the rate charged by the four major banks (currently 5.34 per cent). Borrowers only need a two per cent deposit to qualify and are not charged mortgage insurance.
Under changes to be made in the Budget, income thresholds for borrowing from Keystart will be lifted by $15,000 for singles and couples and $20,000 for families.
This will see income limits increased to $105,000 for singles, $130,000 for couples and $155,000 for families buying a home valued at up to $480,000 in Perth.
In regional areas, where income thresholds are higher, limits will rise by the same amount.
However, the lower barriers will only be temporary, lasting for six months until December 31 this year.
Treasurer Ben Wyatt has also rejected industry pleas to increase the first home owner grant, which is currently set at $10,000 and limited to new homes, while leaving stamp duty concessions unchanged.
MBA boss John Gelavis, who had been lobbying for industry assistance, said the Keystart changes were a “win-win” that would provide a much-needed boost for home builders and a leg-up for a growing number of borrowers overlooked by the banks.
“Right now the housing industry is effectively on its knees — it’s the worst it’s been,” Mr Gelavis said.
Mr McGowan said the banks’ move to restrict home lending had made it significantly harder for people to enter the market and “realise their dream” of property ownership. He said that by stepping into the breach, the Government hoped to provide a lifeline for those borrowers who ordinarily would have been unable to get the finance.
The Government also wanted to help the housing construction industry, which was enduring one of its worst periods on record.
“My Government wants to help as many Western Australians as possible achieve the dream of home ownership,” Mr McGowan said.
“The changes to the Keystart eligibility criteria will help drive new building activity and stimulate the State’s economy.”
Mr Wyatt said it was “clear that banks have become more cautious with lending”, prompting the Government to take action.
The Budget boost follows the Government’s decision in the mid-year review to increase Keystart’s lending capacity by $420 million to $4.8 billion.