Albo should have known better

WHACK!
 
Last week I got the Treasurer to answer readers’ questions, and the verdict was swift and brutal:
 
Old Jimbo may have been Barefoot for the day, but readers thought the bloke had bunions!
 
Yet for me it was his advice to a young first home buying couple – that they only needed to save up a 5% deposit (thanks to the Government’s First Home Loan Deposit Scheme) – that caused my left eye to twitch and made me sweat all the way down to my mangoes.
 
My view?
 
Look, it’s not going to win me any votes, but I believe that if you can save only a 5% deposit … then you really can’t afford a house.
 
Yet in 2021, then-Treasurer Josh Frydenberg basically said “hold my beer”.
 
He expanded the First Home Loan Deposit Scheme (FHLDS) to ‘help’ low-income single parents, and lowered the deposit required to just 2%!
 
Then came Labor.
 
Now Albo was famously raised by a single mum in public housing. So he must have known in his bones that this was a very dangerous policy. And that it would not just legitimise but actually incentivise vulnerable people to make a highly risky financial decision … at a time when interest rates were at record lows and house prices were at record highs. However, in the heat of the election he too joined the 2% down party with his shared equity ‘Help to Buy’ scheme.
 
What could possibly go wrong?
 
Well, let’s fast-forward a few years and hear from Jane, who wrote to me a few weeks ago.
 
“Scott, I went against what you recommended, but the government said they were helping me buy a unit with a 2% deposit for my child and me. I’m a low income earner and also an immigrant with a parent overseas who I’m providing for. I’ve made it work so far by taking on extra work on the weekends. But the fixed rate with my bank changes over (higher!) in a few months and I’m terrified. Do you think moving banks will help keep the variable rate manageable when it’s my turn at the cliff?
 
The fact is, Jane has about as much chance of moving banks as Peter Dutton has of being Prime Minister.
 
For the record, I called Jane and put her in contact with a financial counsellor in her area who will work with her – and her bank – to try and find a way forward.
 
But it won’t be easy.
 
She pretty much had zero equity in the joint to begin with, and it went down from there. So not only is she deeply in the red but, more importantly, her interest rate is about to triple, and her repayments could take food off her table.
 
I don’t blame her for wanting to buy her home, and provide financial security for her kids.  The problem is she trusted that the politicians were acting in her best interest … not theirs.
 
Now let me get off my soapbox and introduce you to someone who not only thinks I’m dead wrong … but can prove it.

Tread Your Own Path!