- Expanded lending capability aims to create and retain jobs, stimulate WA economy
- Keystart accounts for more than a third of all first homebuyer loans in 2017-18 financial year
- WA has highest percentage of first homebuyers in the nation
The McGowan Government will extend the loan book of the State’s highly successful Keystart scheme by $420.9 million, as part of a suite of measures to improve housing affordability for Western Australians.
Premier Mark McGowan announced the extension today ahead of the State Government’s Mid-Year Review scheduled for later this month.
The extension for Keystart – on top of the $500 million already approved since the McGowan Government came to power – will help more Western Australians into home ownership at a time when property prices are more affordable.
Of the 2,789 loans approved in total by Keystart in 2017-18, 2,169 were for construction or newly constructed homes – building activity that stimulated the State’s economy by supporting an estimated 1,700 jobs and generating up to $670 million in economic activity.
As the housing market stabilises, the McGowan Government has developed a suite of responses to support the residential construction sector and provide more people with the chance to achieve home ownership – including boosting Keystart’s lending capacity to $4.8 billion.
Based on the median value of loans, the extension potentially equates to an extra 1,100 home loans.
As stated by Housing Minister Peter Tinley:
“Extending Keystart’s lending capacity is expected to put more homebuyers in front of the building companies, thereby supporting the industry’s chances of retaining and creating jobs and stimulating the State’s economy.
“At the direction of the Australian Prudential Regulation Authority, banks have tightened credit controls in the past three to four years. The Banking Royal Commission appears to have accelerated this tightening process.
“As a result, loan applicants’ expenses are under closer scrutiny. For example, the number of expense categories assessed by banks has increased and credit is harder to obtain.
“But Keystart offers an attractive alternative. As the most successful scheme of its kind in Australia, Keystart reduces financial barriers for Western Australians entering the property market.
“First homebuyers engaging a traditional lender generally require a deposit of at least 20 per cent of the property value in order to avoid paying Lenders’ Mortgage Insurance, but under Keystart the deposit for first homebuyers is as low as two per cent of the purchase price.
“Because Keystart also does not charge Lenders’ Mortgage Insurance, the total upfront costs are substantially lower than those charged by a traditional lender.
“Since its establishment as a Labor Government initiative in 1989, Keystart has approved more than 66,700 loans – enabling more than 102,000 Western Australians to own their own homes.
“The McGowan Government’s continued support for first homebuyers through the $10,000 first home owner grant is a critical source of funds for customers in meeting Keystart’s deposit requirements.
“In 2017-18, Keystart approved 2,474 loans eligible for the first home owners grant – 34 per cent of all first home owner grants approved in WA this year.
“Keystart is one of the main reasons why WA has the highest percentage of first homebuyers in the nation and extending its loan book is an important way to deliver more home ownership for WA households.”