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JOFirst home buyers in Australia who used Labor’s 5% deposit scheme are now defaulting on their mortgages at double the rate of every other buyer in the country.
The Australian Financial Review confirmed what every economist warned about when Albanese expanded the First Home Guarantee in October: it was never going to make housing affordable. It was always going to trap young Australians in loans they can’t service.
Here’s what the data shows:
1. Default rate for first home buyers using the 5% deposit scheme: 0.78% in arrears
2. Default rate for everyone else: 0.39%
3. Late-stage arrears (90+ days) on home loans over $750,000 are up 8.9% year on year
4. Inflation just hit 4.6% - highest since 2023
5. The RBA is hiking the cash rate for the third time this year, with a fourth rate rise expected.
Petrol prices surging, electricity costs rising, rental supply collapsing
Here’s how the scheme actually works in practice:
Income caps were removed. The maximum purchase price was lifted to $1.5 million. Unlimited places were made available. The federal government guarantees the gap between your 5% deposit and the standard 20%.
Sounds generous. It isn’t.
The second you let unlimited buyers into the market with cheap deposits and don’t increase housing supply, prices go up. The scheme didn’t help first home buyers afford homes. It pushed property prices higher, fuelled inflation, and handed buyers a 95% loan-to-value mortgage with no equity buffer and no path to refinance.
If you owe more than 80% of your property value, the banks won’t refinance you without lenders’ mortgage insurance - which wipes out any savings from a better rate. So you’re stuck. In a house you can’t afford. On a loan you can’t escape. Watching repayments climb every quarter while the RBA keeps hiking.
Albanese got his press release. Labor got to claim they helped young Australians into the housing market. The headlines looked great in October.
The foreclosure notices are going to look even better in spring.
Save this for when someone tells you the government is “helping” first home buyers.
#AustralianPol #Property #FirstHomeBuyer #RBA #Money
@joetchandon
