Trending Financial News 8 Jan 2020

First Home Loan Deposit Scheme slammed by experts

The federal government’s First Home Loan Deposit Scheme does not address the causes of high home prices that lock young people out of the market. National property data researchers from CoreLogic have slammed Prime Minister Scott Morrison’s signature housing policy announced during his re-election campaign and started on 1 January 2020.

The First Home Loan Deposit Scheme aims to provide deposit guarantees to up to 10,000 first home buyers per year allowing them to access to housing finance with a small deposit of only 5 per cent.

Eliza Owen, CoreLogic’s head of residential research said the scheme does not address affordability because it ignores the root causes. She said the scheme is limited to 10,000 guarantees a year awarded on a first come, first serve basis which just a “small portion of demand.”

Criticism of First Home Loan Deposit Scheme growing

The federal government’s First Home Loan Deposit Scheme (FHLDS) started on 1 January 2020 and is already being heavily criticised by property industry experts.

The First Home Loan Deposit Scheme was a key election promise of the Prime Minister Scott Morrison.

CoreLogic’s head of residential research Eliza Owen, has spoken out against the scheme, pointing out that it benefits high income earners.

“To be eligible for the FHLDS, individuals must earn a before-tax income of less than $125,000 per annum. Couples must earn less than $200,000,” Eliza Owen told Mortgage Business.

“If these income thresholds seem high, it’s because they are.

An individual earning $125,000 per year earns more than 80 per cent of Australians said Ms Owen.

One big four bank is more popular than the rest

The Commonwealth Bank continues to outperform the other big banks in the home loan market. CBA is the only big four bank to be increasing both its owner-occupier and investment home loan portfolios according to new monthly data from the Australian Prudential Regulatory Authority.

CBA added $2.2 billion of new home loans to its books in November 2019.

Meanwhile Westpac lost home loan market share as did ANZ Bank while NAB’s home loan sales were flat.

Interest rate outlook for 2020

The Reserve Bank of Australia is expected to cut interest rates in February 2020 or soon after. Many economists are tipping lower rates in Australia in 2020.

HSBC chief economist Paul Bloxham told News Ltd that he expects “one more cut to 0.5 per cent” with more cuts possible.

Futures markets are trading at a level indicating a 53 per cent expectation that the RBA will cut rates in February.

Keep up to date with the latest rates outlook at InfoChoice.

Best term deposit rates in January 2020

Banks and other institutions change their term deposit rates regularly. Savers need to be monitoring and comparing rates to get the best deals.

In January 2020, InfoChoice’s top term deposits include the Green Term Deposit from UBankCiti Australia’s term deposits and Judo Bank’s very competitive range of terms.

The most competitive term deposit rates from the big four banks include ANZ Bank’s Special Rate of 1.60 per cent pa on 7 month terms.

Read more about the best term deposit rates in January at InfoChoice.

Highest 12-month term deposit rates in January 2020 

The highest 12-month term deposit rates now listed on InfoChoice are:

Judo Bank 12 month Term Deposit 2.0%pa

AMP Bank’s 12-month Term Deposit 1.70%pa

RaboBank’s Online Savings Term Deposit 1.50%pa

Read more about term deposit rates in January at InfoChoice and compare these TD rates with other rates now.

What is the best way to deal with post-Christmas debt?

A focus on bills and debt repayments can get you on the right financial footing and InfoChoice can help you find the top rates on money management tools like unsecured personal loans, zero-interest Balance Transfer credit cards, personal loans for Debt Consolidation and High Interest Savings Accounts.

Use the InfoChoice Calculators to help you get on top of your money management issues this year, like the InfoChoice Budget Planner calculator and the InfoChoice Credit Card Repayment calculator.

Read more about getting on top of Christmas debt here.

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