First time home buyers get new grant deal to boost home construction

First time home buyers will be eligible for grants of up to $21,000 in a new economic package annouce bt Kevin Rudd today.

The extra cash for first home buyers will be only available for a short time. All contracts entered into by June 30 next year will be eligible for the new assistance. 

The  first home owners grant will be doubled from $7000 to $14,000 for first home buyers buying an established home.

  However first time buyers who buy newly-constructed home or enter into a construction contractor with a builder will receive an extra $14,000. This will take their total grant to a massive $21,000. 

The Federal Labor Government will invest about $1.5 billion in the housing market over 2008/09 and 2009/10 through this initiative, and the flow on effect will be felt in the retail sector that supply home based goods and services from insurance to pool and spa builders, electrical and furniture retailers and carpet and curtain suppliers and manufacturers.

Australian Government to compete with banks for home loans

Australia plans to set up a financial arrangement similar to Fannie Mae in the US and will use the AAA of the Government to raise mortgage funds for non bank lenders.
The step was announce last week as Wayne Swan announced that the Federal Goverment invest $4 billion to revive the non-bank mortgage market and boost competition in the mortgage lending sector against the banks.
The aim of the unprecedented action is to give borrowers more options than the five major banks now dominating the market.
This could start a price war, which the Government hopes will keep interest rates low and stimulate the flat housing market.
Non bank mortagge lenders have relied on overseas money to service customers, but the supply has dried up with the credit collapse in the US. What they can get is at a higher premium and this means that the banks effectively have little competition.
Lenders who rely on wholesale funding such as Macquarie and Challenger and the mortgage managers who are supplied by them have either not been lending at all or have seen volumes plummet.
This has allowed banks to dominate low-risk lending, taking as much as 90 per cent of new loans, because they have been able to use the reliable turnover of funds in their deposit accounts.
The Australian Office of Financial Management (AOFM) would buy mortgage-backed securities from smaller lenders, non-banks and building societies.
There would be two tranches of $2 billion each, possibly more.
Part of the money would come from the 2007-08 Budget surplus, which came in $2.9 billion higher than expected at $19.7 billion.
John Symond of Aussie Home Loans, one of the first companies to introduce competition in the banking sector in the 1990s, said: "It's a very positive step and means that competition could return to the banking market after a year when there has been no competition at all.
"Consumers will be the winners at the end of the day."

For first home buyers now is the time to buy your home

First time home buyers are in for a golden opportunity in Queensland's property market as cracks in the property market appear.
Unit prices are falling in the Gold Coast according to Mr Mortgage, and so are land prices. Just about the only thing that is rising are the special offers from new home builders.
Mr Mortgage says first home buyers should look for distressed property owners and make low offers to save even more.
Some locations 15km to 25km away from the Brisbane CBD had registered falls of 5 per cent.
Forecaster BIS Shrapnel predicts fewer interstate movements as families come to terms with the changing economy and it expects demand for housing will decline this financial year.
This should see fewer blocks of new land produced in the short term.
"Brisbane and Queensland are well below 12-month averages," Mr Kusher said.
There are 9458 properties listed for sale in Brisbane and houses are now taking an average of 47 days to sell.
As conditions for sellers of investment properties were still tough, with increasing stock and a decrease in demand from investors, now is the time for first time home buyers to show no mercy and grab a bargain..