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$600m first home buyer savings unlocked

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4 minute read

More than $600 million in savings from would-be first home buyers is set to be unlocked today when the government’s First Home Saver Accounts scheme is abolished.

According to Chris Brycki, founder and CEO of online investment adviser Stockspot, there are some 47,400 Australians who have invested in the scheme, with $606.6 million of funds locked in those accounts under strict rules of access. As was announced in the federal Budget in May, the scheme is to be withdrawn from today, granting savers unfettered access to their accounts.

These savings, which had strict controls attached, included government contributions of 17 per cent on annual payments of up to $6,000, and a capped 15 per cent tax rate on interest earned.

“With the 2014/2015 income year account balance cap at $95,000, there will be a significant number of Australians … having a nice little pool of savings at their fingertips,” said Mr Brycki.

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Mortgage Choice CEO John Flavell, however, doesn’t expect a huge rush of first home buyers suddenly entering the mortgage market.

“The expectation was that there would be 730,000 of these accounts. Currently there are only about 50,000 accounts, and the average balance is only about $12,000, so not enough for a deposit,” he told The Adviser.

“Was it a complete failure? Relative to what they set out to do it was, but it still helped 50,000 people. This was a scheme that offered some benefit [and] the government has taken that away. What, if anything, will now be done to provide some sort of assistance, some sort of incentive, some sort of relief for first home buyers?

“This challenge has become even more difficult in recent months because of changes to lending policy, equally applied to owner-occupiers as well as investors, which is having a significant impact in terms of first home buyers. I can’t see any positive steps being introduced to help first home buyers.”

[Related: Flavell questions govt home ownership inquiry]

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