Borrowers who rely on welfare can still be good home loan clients, the Senate Inquiry into Housing Affordability has heard.
HomeStart Finance, South Australia’s government-backed lender, said it had proved during its 25-year history that borrowers shunned by mainstream lenders can still be successful home buyers.
The lender’s submission said it had turned a profit in every year of operation – even though 32 per cent of its borrowers since 2008 had relied on Centrelink as their primary income source.
The lender estimated that 80 per cent of its customers would have been unable to get a loan from mainstream sources at the time they purchased a home.
“Notwithstanding this statistic, at least half of loans made to first home buyers are eventually refinanced, which means that once a customer has spent a few years building equity and demonstrating a repayment history with HomeStart they become attractive for mainstream lenders.”
HomeStart said access to appropriate finance was a key issue in the debate on housing affordability, and urged the government to adopt its model nationally.
The lender also suggested that stamp duty barriers be lowered by allowing buyers to pay in instalments or defer payment until they sold the property.
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