HOMEOWNERSHIP ORDER – AUSTRALIA’S first homebuyership order was the biggest one in nearly a decade in 2015.
Key points:Homeownership order fell in 2015 and the government will increase the interest rate for the first time in a decadeHomeowners will get a higher interest rate than they are paying nowHomeowners who sign up for the mortgage in the next six months will be eligible for a further increaseThe number of people signing up for mortgage loans in Australia dropped from 13.7 million in 2014 to 12.7m in 2015, according to figures from the ABS.
“It was a slow year for home ownership orders in Australia and I’m quite surprised that we’re still having such a large number of them signed up,” Australian Competition and Consumer Commission director of policy and regulatory policy Peter Watson said.
“The increase in interest rates is a real issue.
It means that people are signing up, paying the upfront cost and then having to pay for a second mortgage or another loan, which could potentially be more expensive.”
But we don’t know exactly how much this will cost.
“Mr Watson said the ABS was still working on figures, but was hopeful that homeownership was on the rise again.”
That’s why we’re increasing the interest rates for the next couple of years, so that we can keep the number of home buyers coming to the market up,” he said.
The first home buyership order in Australia was issued in 2014, with the government deciding to increase the rate for borrowers from 3.4 per cent to 3.6 per cent, in line with the market’s average rate of 3.5 per cent.”
For the next two years we’re going to be increasing the rate, to 3 per cent,” Home Affairs Minister Christopher Pyne said.
Mr Pyne added that the government would “continue to do everything we can to encourage home ownership”.”
I think the number will increase for sure,” he told AM.”
We’re going all over the place to try and encourage people to get in, and we’re keeping an eye on where we can get a better price.
“The interest rate increase was welcomed by some homebuyer advocates, with HomeOwners Association president Stephen Moore saying he was glad to see the government “start the rate increase”.”
They have a mandate to help people get a mortgage and this is the first step in the right direction,” Mr Moore said.