Coalition spruiks easier debt as housing crisis fix

The Coalition says it has a way to get hundreds of thousands of aspiring homeowners on the property ladder with one quick change.

Dropping the serviceability buffer on home loans is the key to getting hundreds of thousands of young Australians on the property ladder, the Coalition says.

The buffer, set by the financial services watchdog to make sure borrowers can pay their debts, is added on top of a loan’s interest rate and must be considered by lenders before approving a mortgage.

But fresh data released this week showed lowering the buffer from 3 per cent to 2.5 per cent could boost borrowing capacity by $276bn across the country and help about 270,000 would-be home buyers secure median loans.

A further 400,000 Australians aged between 25 and 34 would also get higher borrowing capacity.

The Coalition has called the serviceability buffer “overly cautious” and pledged to reform the regulator that sets it.

Andrew Bragg, the Liberal senator charged with working out the Coalition’s home ownership policies, told NewsWire lowering the serviceability buffer was “practical” and blasted Labor for showing “no creativity in fixing their housing crisis”.

Senator Andrew Bragg says Labor has ‘shown no creativity in fixing their housing crisis’. Picture: NewsWire / Martin Ollman

“It will help arrest the decline in home ownership, as it’s very hard to get a first home if you can’t get a mortgage,” he said.

“The Coalition’s lending reforms will directly benefit younger Australians by giving them a leg up in the market when they are trying to buy their first home.

“These are practical, realistic plans unlike Labor’s obsession with bureaucratic, ugly housing solutions which have failed in these past 3 years.”

The Albanese government, on the other hand, has pledged to make buying a property easier dropping the minimum deposit to just 5 per cent for first home buyers.

Labor is pledging to drop the minimum deposit to just 5 per cent for first home buyers. Picture: NewsWire / Martin Ollman

To give production yet another bump, Labor also promised to pump $10bn into building 100,000 new homes only for first home buyers – a scheme it has dubbed Build to Sell that fits into its broad $43bn Homes for Australia Plan.

Under the plan, some 1.2 million homes would be built by 2029.

Though, experts have cast doubt on the ambitious target.

While the Coalition has focused more freeing up finances for would be home buyers, it has not gone into much detail on how it would address the supply-starved property market.

Its signature supply-focused proposal is a $5bn plan to “unlock up to 500,000 new homes” by fastracking critical infrastructure for greenfield developments.