{"id":21253,"date":"2025-09-29T15:48:52","date_gmt":"2025-09-29T15:48:52","guid":{"rendered":"https:\/\/finderica.com\/?p=21253"},"modified":"2025-09-29T15:48:52","modified_gmt":"2025-09-29T15:48:52","slug":"new-rules-could-get-first-home-buyers-into-market-7-years-sooner","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=21253","title":{"rendered":"New rules could get first home buyers into market 7 years sooner"},"content":{"rendered":"
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Aussies looking to enter the housing market for the first time could slash the time needed to save a deposit by the better part of a decade, but purchasing with a smaller deposit could come at a cost.<\/p>\n<\/div>\n

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The Home Guarantee Scheme lets eligible first-home buyers purchase with as little as a 5% deposit, avoiding potentially thousands in Lenders Mortgage Insurance (LMI).\u00a0<\/p>\n

Its expansion, effective 1 October, will see place limits and income caps scrapped, while property price thresholds will be raised to better match median prices around the nation.<\/p>\n

But while the Home Guarantee Scheme’s expansion is “a real game-changer,” Domain chief of research and economics Nicola Powell warns “it’s not a magic fix”.<\/p>\n

First home buyers slash deposit savings time by up to 7 years<\/h2>\n

As of Wednesday, Sydney buyers purchasing a property worth the maximum allowable price under the scheme \u2013 $1.5 million \u2013 may need to save for just three years, rather than the decade they might need to secure a 20% deposit, new analysis from Domain shows.<\/p>\n

Buyers in Melbourne and Brisbane might find themselves wiping nearly six years off their savings journey, securing a deposit in just over two years.<\/p>\n

But entering the market with a smaller deposit can come at a significant cost.<\/p>\n

“Buyers will still face bigger mortgages and the risks that come with rising interest rates and potential property price drops,” Dr Powell said.<\/p>\n

“We also expect a fresh wave of demand, which could ramp up competition and push prices higher in more affordable areas, especially if supply doesn’t keep pace.”<\/p>\n

Soaring rental prices could offset extra interest costs<\/h2>\n

The trade-off between home loan interest and rent is being sharpened by the soaring cost of the latter.<\/p>\n

According to Cotality, the tens of thousands \u2013 or even hundreds of thousands \u2013 of extra interest a first home buyer might pay by putting down a 5% deposit rather than a 20% deposit could be dwarfed by the rental expenses they’d otherwise face.<\/p>\n

“Even though a smaller deposit means paying more interest over time, it could still work out cheaper for renters,” Cotality Australia head of research Eliza Owen said.<\/p>\n

“Since January 2020, the median weekly rent across Australian dwellings has increased an estimated $200 per week to $669.<\/p>\n

“Getting into a home sooner may mean spending less time paying rent, and those savings can add up.”<\/p>\n

Considered alongside potential LMI savings of up to $80,000, some Sydney first home buyers could save as much as $96,250 by turning to the expanded scheme.<\/p>\n

Though, Ms Owen notes the figures included in the chart above should be taken as illustrative rather than indicative of the financial ramifications first home buyers face.<\/p>\n

Scheme expansion sends buyers into a ‘frenzy’<\/h2>\n

The loudest criticism facing the scheme’s expansion is its potential impact on property prices \u2013 a concern that has already proven worthy, according to the Real Estate Buyers Agents Association of Australia (REBAA).<\/p>\n

“Markets are already in a frenzy, let alone what the next few months will bring once the scheme has started,” REBAA president Melinda Jennison said.<\/p>\n

Ms Jennison observes prices are already jumping, with homes in key price categories selling for $50,000 more in just a month.<\/p>\n

“Properties that were selling for $750,000 last month are now selling for close to $800,000,<\/p>\n

“What was $800,000 will soon be $900,000, which will make it even more difficult for first timers to secure finance for a home \u2013 even with the scheme’s 5% deposit on offer.”<\/p>\n

Treasury modelling conducted before the scheme’s expansion was announced found it would lead property prices to rise just 0.5% over six years, while previous analysis by Proptrack found the scheme largely hasn’t impacted property prices since its 2020 introduction.<\/p>\n

However, Ms Owen is among those noting the impact will likely be noticeable in the near-term.<\/p>\n

“There will almost certainly be a short-term boost to home values up to the threshold of the scheme, coinciding with interest rate falls and tight levels of housing supply,” Ms Owen said.<\/p>\n

“While individuals on the scheme could leap over the deposit hurdle faster, this policy is ultimately a demand side stimulus which fails to address why deposits \u2013 and now rents \u2013 are so unaffordable in the first place.”<\/p>\n

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<\/path><\/path><\/path><\/svg>Important Information and Comparison Rate Warning<\/span><\/div>\n

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Image by Rilla Paris on Unsplash<\/em><\/sub><\/p>\n

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Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Aussies looking to enter the housing market for the first time could slash the time needed to save a deposit by the better part of a decade, but purchasing with a smaller deposit could come at a cost. The Home Guarantee Scheme lets eligible first-home buyers purchase with as little as a 5% deposit, avoiding<\/p>\n","protected":false},"author":1,"featured_media":21254,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[216],"tags":[1628,26,94,548,4060,203],"class_list":{"0":"post-21253","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-mortgage","8":"tag-buyers","9":"tag-home","10":"tag-market","11":"tag-rules","12":"tag-sooner","13":"tag-years"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/21253","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21253"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/21253\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/21254"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21253"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}