Buyers shunning First Home Savers Account.
Article by Mozo
Too many regulations and plain ignorance are being blamed for the low uptake of the governement's First Home Saver Accounts.
The account, that acts as more of a term deposit, offers first home buyers an effective way of saving for a deposit or the costs associated with building a new home. The benefit of the account being the government adds contributions based on a percentage of the account owners deposits plus earning interest on the overall amount. The account then attracts a tax rate of 15 percent.
However, the Australian Prudential and Regulation authority shows that in December there were around 39,000 First Home Saver Accounts opened, 19 times short of the government's prediction of around 750,000 new accounts.
"When it was first launched I think there were to many restrictions on the product. If you didn't use that money to buy your first home, it had to be rolled over into your super. The restrictions around it were quite onerous and people baulked at it," according to ME Bank group executive Ian Hendey.
The fact that funds cannot be accessed at will may appear unattractive but can prove to be extremely beneficial for young first home buyers.
"I viewed it as forced savings and there was no temptation to spend the money because I knew I couldn't," first-home buyer Lucy Hocking told news.com.au
While saving a sufficient deposit is an important step for first home buyers, a home loan comparison to capture the best possible interest rates with the least fees and charges is an important action for buyers to ensure they are saving as much as possible on the repayments of their loan.
Have a question about home loans? Ask the gurus at Mozo Answers.