Four big banks slammed for not helping first homebuyers

Four big banks slammed for not helping first homebuyers

Posted on Friday, December 09 2011 at 4:15 PM

In the wake of the controversy about the four major banks delaying their passing on of the Reserve Bank’s full interest rate reduction, RateCity has called on the banks to offer First Home Saver Accounts.

The company says only six per cent of first homebuyers are using the government scheme for boosting savings, despite initial projections that the accounts could be helping half a million Australians by 2011.

RateCity chief executive officer Damian Smith says more people would save for their first home if the four banks offered a similar scheme to the government.

“We’re surprised that the take-up remains low,” he says.

“The scheme is actually very attractive if you’re planning to enter the housing market for the first time in the next few years. Something clearly isn’t working and we think more flexibility and wider availability, especially from the big four, is the key.

“For example, assuming you start with a $20,000 sum and deposit $1000 per month for the next four years at a base rate of 4.8 per cent, taking into account interest earned and tax saved, a first homebuyer could potentially have the final balance of just over $81,000. By contrast, the best online savings account available at the moment would leave you with a balance of $77,000 after that time – so you’d be over $4000 better off with the first home savers scheme because of the rate boost and the lower tax rate.

“One of the issues is clearly availability – when none of the major four banks offer these accounts, over 80 per cent of Australians won’t see them on display.

“Here’s an opportunity for the big four banks to do something really positive – after a week where they copped very negative headlines. Offering these accounts shouldn’t cost them much at all, as the interest rate boost and tax subsidy are provided by the government. We urge the big four banks to work on getting these products out into the market, to give first homebuyers a great reward for disciplined savings.”

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