FY22/23 budget: How homeowners and buyers will be affected

Find out what budget measures could affect housing affordability, mortgages and more

07 April 2022|3 minute read

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The Morrison Government’s plans for the 2022-2023 Federal Budget have been announced and there are a few measures impacting homeowners and home buyers.

Here are some of the key takeaways from the 2022 Federal Budget that homeowners and prospective buyers might like to be aware of:

1. The First Home Guarantee is set to be extended

The First Home Guarantee (previously known as the First Home Loan Deposit Scheme) is set to be extended to a total of 35,000 places per year. This is an increase from 10,000 places in 2021.

The scheme makes it easier for borrowers to buy a home with a low deposit. Through the program, eligible first home buyers can have a deposit as low as 5% to buy a home.

Up to the remaining 15% is guaranteed by the government, and this means you won’t have to pay Lenders Mortgage Insurance (LMI) which is often charged to borrowers with deposits lower than 20%.

2. More opportunity for regional home buyers

While many first home buyer schemes tend to prioritise buyers in the cities, the Home Guarantee program is launching a new initiative to help regional buyers.

Working in the same way as the First Home Guarantee, buyers under the Regional Home Guarantee are able to purchase a property with a deposit as low as 5%. The government secures up to the remaining 15%.

Unlike the First Home Guarantee, previous home owners are eligible for the Regional Home Guarantee. However, you aren’t eligible if you’ve owned property or land in the past 5 years.

In the 2022-2023 financial year, there will be 10,000 places available to regional home buyers. This move may bring more home buyers to regional areas, potentially cooling down the hot markets of various major cities.

3. Single parents will continue to benefit from the Family Home Guarantee

This is the third scheme that is part of the Home Guarantee program. Similarly to the First Home and Regional Home Guarantees, the Family Home Guarantee helps low deposit buyers purchase a home without having to pay LMI.

Eligible borrowers under the Family Home Guarantee need a minimum deposit of just 2%, with the government guaranteeing up to the remaining 18%.

Launched as part of the 2021-2022 budget, the government offered 10,000 places in the scheme over a four year period. An additional 5,000 places are set to be added per year commencing from the upcoming financial year.

To be eligible for this scheme, applicants must be single, have at least one dependent child and be an Australian citizen earning up to $125,000 per year. You do not need to be a first home buyer, but you cannot currently own property.

To learn more about the different Home Guarantees, head to our article unpacking each scheme and its eligibility criteria.

4. Tax cuts to put some money back in your pocket

Accounting for the rising cost of living across Australia, low and middle income earners will get an extra $420 back at tax time.

Additionally, the low and middle income tax offset that you may remember from 2021 is set to return in the upcoming financial year. This means that some people may be eligible to claim up to $1,500 at tax time.

While this point isn’t specifically to do with property or homeownership, these tax cuts may put extra money in your pocket.

As a homeowner, this is money that can potentially go towards extra home loan repayments. Or for a home buyer, it’s money that could go towards your deposit, or one of the other upfront costs of buying a home.

5. Wages are unlikely to see meaningful increases

The budget has predicted that wages will barely be higher than the inflation rate over the next couple of years.

Paired with the rising cost of living, the lack of wage growth could make saving for a house even more difficult for Aussie home buyers.

Additionally, this puts further pressure on existing homeowners with home loans to worry about.

6. Increased funding for the National Housing Finance and Investment Corporation

In a push to create more affordable housing, the Morrison Government has pledged to provide a further $2 billion to the National Housing Finance and Investment Corporation (NHFIC).

This aims to support the financing and provision of social and affordable housing to vulnerable Australians. The increased funding is predicted to support approximately 10,000 more dwellings.

7. Increased funding for the National Housing and Homelessness Agreement

In addition to more funding being put towards the NHFIC, around $1.64 billion is set to be dedicated towards the National Housing and Homelessness Agreement (NHHA) in the 2022-2023 financial year.

The NHHA provides affordable, secure housing options and has programs aimed at preventing homelessness.

If you’re interested in learning more about a home buyer scheme, or just want to know about your home loan options, book an appointment with your local Aussie Broker today.

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