May was a big month for change in Australia, with the result of the 2019 Federal Election surprising many.
As a result, there have been a number of recent announcement and developments that may impact on your financial world – or that of someone you know.
As your expert financial partners, we thought we’d break down two of these developments in order to help you better understand what they may mean for your financial world.
This Q&A covers the following topics:
- Liberal’s plan to lower the percentage needed for a home loan deposit
- Low wage growth and underemployment in Australia
Liberal’s Plan to Lower The Home Loan Deposit Percentage
On Mother’s Day 2019, the Coalition announced their proposal to lower the required percentage needed for a loan deposit from around 20% to 5% if they win the next election. They plan on doing this by covering the lender’s mortgage insurance, otherwise known as LMI, of home buyers with an income of up to $125,000 for an individual or $200,000 for a couple. At the moment, if a potential home owner isn’t able to save enough for the industry-standard 20% home loan deposit, the banks require them to take out mortgage insurance in case they aren’t able to keep up on their mortgage payments.
If either the Liberal party or the Labor Party – who have announced that they’ll match Liberal’s promise – win the next election, those with the prerequisite amount of income and a 5% home loan deposit will have their lender’s mortgage insurance paid for by the government. Scott Morrison said that the idea behind the scheme was to help provide support for young Australians to break into the property market, where before they had been boxed out by wealthy property investors.