The Coalition’s recent election commitment to ease home lending regulations for first-time buyers has drawn criticism, with the Greens dubbing it a “disaster waiting to happen.” Shadow Housing Minister Michael Sukkar announced that the Liberal Party intends to advocate for the Australian Prudential Regulation Authority (APRA) to reduce the mortgage serviceability buffer from its current COVID-19 level of three per cent. This buffer, which ensures borrowers can afford repayment rates that are three per cent above current interest rates, was raised during the pandemic to mitigate risks associated with low rates.
Sukkar argued that the existing buffer is outdated, stating that it prevents nearly 40 per cent of first-time buyers from securing loans. He highlighted that with elevated interest rates, the inflexibility of the serviceability buffer effectively blocks many Australians from entering the housing market. He emphasised the need for change to facilitate homeownership for young Australians.
In contrast, Greens housing spokesperson Max Chandler-Mather claimed that such policy changes would only benefit banks, leading to increased homeowner debt rather than addressing the housing crisis. Chandler-Mather argued that prior generations, including leaders like Prime Minister Albanese, were able to buy homes without substantial mortgage debts and advocated for a return to that model for today’s youth.
The Greens further suggested abolishing practices like negative gearing and the capital gains tax discount, which they believe exacerbate housing unaffordability. Martin Kennedy, a representative from social housing provider Home in Place, warned that loosening lending regulations would ultimately make homes even less accessible, as it would also apply to investors looking to borrow more, inflating housing demand and prices.
Opposition Leader Peter Dutton expressed support for relaxing lending laws, aiming to enable young Australians to purchase homes without parental financial aid. He voiced concerns about the existing arrangements being too complex and restrictive for first-time homebuyers.
Both the Coalition and the Labor Party have signalled their intentions to improve homeownership opportunities, but with differing approaches. While the Coalition is focusing on easing lending restrictions, Labor’s strategy leans towards enhancing social housing and increasing supply. In the recent federal budget, the government also raised income and house price limits for the Help to Buy scheme, further indicating its commitment to addressing housing challenges.