2024-11-28
The Greens have condemned the recommendation of a Senate inquiry to reduce protections for first home buyers by slashing the interest rate buffer used by lenders to calculate a borrowers’ ability to make repayments.
The mortgage serviceability buffer currently adds 3% to the interest rate when banks evaluate the capacity of borrowers to repay their loans.
Lines attributable to Senator Barbara Pocock:
“The buffer acts as a safety net for borrowers so that they don’t get in over their heads when trying to enter the property market. If we remove or even reduce this buffer, it will land a lot more first home buyers in hot water when unexpected circumstances arise.
“This measure might be good for bank profits, but it will lead to a growing number of loan defaults. Mortgage stress is already extremely high, yet the Coalition thinks it’s a good idea to load up home buyers with even more debt than they would otherwise be eligible for. It might be good for big banks’ bottom lines but it loads up risk for first home buyers.
“The inquiry heard evidence from frontline organisations that deal with the human cost of unmanageable debt on a daily basis. They were emphatic that home loans which expose borrowers to debt beyond their means are financially, emotionally and socially crippling.
“The Greens object to this proposal, not only because of the devastating human consequences but also because it won’t fix the housing crisis. This measure, proposed by Peter Dutton’s Liberals, will worsen housing affordability in Australia. It will feed demand in a context of limited supply. Economics 101 tells us this will push house prices up.
“The housing crisis cannot be fixed by reforms which will push up house prices, while the key historic drivers of house price growth are overlooked.
“Australia’s tax system has pushed up the cost of housing. Any serious reform looking at housing affordability needs to tackle the $176 billion in tax concessions for property investors, including negative gearing and capital gains tax concessions.”
“Alongside shifting incentives that favour investors over first-home buyers and owner-occupiers, it is essential that Australia strengthens tenancy protections for renters to ensure that the growing proportion of people renting long-term are not treated as second-class citizens, but are also able to enjoy stable, affordable housing.”
"Key to boosting supply in the housing market is the Greens proposal to build more public housing through a state housing developer. Everybody recognises that supply is critical to solving this crisis but only the Greens are proposing real action that will make a difference to renters and home buyers."
MEDIA CONTACTS
Senator Barbara Pocock:
Tony Collins – 0407 729 681