The WA Government will help more first homebuyers realise the dream of home ownership by temporarily relaxing Keystart eligibility criteria, allowing more people access to the loan scheme.
Since 1989, Keystart has offered alternative options for low-to-moderate income earners who have been unable to be serviced by conventional lenders – this includes a lower deposit scheme, no lenders mortgage insurance and other measures for eligible residents.
Under the most recent initiative, existing income limits for Keystart (the State Government-owned mortgage lender) will increase by $15,000 for singles and couples and by $20,000 for families between July 1 and December 31, 2019.
The income limits will revert to current levels from January 1, 2020.
The plan is included in a raft of targeted housing stimuli announced as part of this week’s State Budget.
Treasurer Ben Wyatt says new housing commencements have weakened due to external factors, including the tightening of lending conditions by banks and difficulties of potential homebuyers accessing finance.
“This has impacted on employment in the WA construction industry in the past year,” Wyatt says.
“It is clear that banks have become more cautious with lending in the wake of the Hayne Royal Commission, so we have implemented these temporary changes to make Keystart finance available to people who may have been unsuccessful in applying for a home loan with a bank.
“The State Government’s $10,000 First Home Owners’ Grant and discounted rates of stamp duty are also available to encourage eligible first home buyers to build a residential property.”
But the Urban Development Institute of Australia (UDIA) WA cautiously welcomed the announcement, saying the increase does not go far enough.
UDIA WA chief executive Tanya Steinbeck says UDIA WA recommended a 25% increase to Keystart thresholds in the 2019 State Budget submission, but this temporary increase “falls significantly short of what we requested”.
“UDIA has undertaken some quick calculations and even with this new Keystart criteria, options remain limited for where buyers can actually find a property that is under the $480,000 price threshold,” Steinbeck says.
“Out of Perth’s 301 residential suburbs there are just 125 suburbs, or 42% of suburbs, where the median house price is under the $480,000 limit that is set as the maximum purchase price for a Keystart loan. This limits choice considerably.
“The extremely tight lending conditions that banks are currently imposing mean it has become almost impossible for many to afford to purchase their own home.”
Housing Industry Association WA executive director Cath Hart welcomed the announcement.
“We are pleased that government has responded to the needs of industry and the home buying public by broadening access to Keystart loans,” Hart says.
“The low deposit scheme helps West Australians to access finance, which is one of the biggest challenges being faced by home buyers at present.
“Government has shown positive leadership in supporting this change that will support the WA home building industry.”
The temporary changes to income criteria come after the State Government extended Keystart’s loan book by $420 million in December last year.
Last financial year, Keystart approved a total of 2789 loans, with 2169 of those for construction or newly constructed homes