By Tim McKibbin, REINSW CEO
The Government's proposed First Home Loan Deposit Scheme allows eligible first home buyers to purchase a property with a five per cent deposit.
It's concerning that the banks were not consulted. It is risky to assume that the banks will finance prospective purchasers if they haven't saved the required deposit. Acting responsibly, banks should refuse to provide finance if they have concerns about the applicant's ability to comfortably service the loan.
If a loan is granted to a Government-assisted applicant, banks would likely seek additional security measures, such as a higher rate of interest.
It's interesting, too, that the proposed scheme encourages banks to lend, considering it's less than six months since their lending practices were heavily criticised.