Election 2019: What to expect from the new government

The Liberal-National Coalition has retained power after winning the election 2019, with Scott Morrison retaining his position as Prime Minister and a new First Home Loan Deposit Scheme expected to be introduced.

In a closely run campaign that was neck-and-neck between the Australian Labor Party and the coalition of the Liberal Party of Australia-National Party of Australia, Prime Minister Scott Morrison clinched the lead late on election day (18 May).

While many election polls had predicted a Labor win, several seats were lost on the night, including that of former PM and Liberal candidate for Warringah, Tony Abbott, who lost his seat to independent candidate Zali Steggall.

Following an earnest concession speech from Labor leader Bill Shorten, the path was laid for Mr Morrison to remain as the 30th Prime Minister of Australia.

Below, we round up some of the Coalition’s main commitments impacting the mortgage and property sectors.

First Home Loan Deposit Scheme

Last week, Prime Minister Scott Morrison announced a new First Home Loan Deposit Scheme that will enable first home buyers to access a mortgage with a 5 per cent deposit.

This would make 95 per cent loan-to-value ratio mortgages available to first home buyers earning up to $125,000 annually (or $200,000 for couples) from 1 January 2020.

The First Home Loan Deposit Scheme, which will partner with private lenders and prioritise smaller lenders in a bid to “boost competition”, will be available to qualifying first home buyers from 1 January 2020.

The value of homes that can be purchased under the scheme will be “determined on a regional basis, reflecting the different property markets across Australia,” Mr Morrison said.

The Prime Minister estimated that the scheme would help first home buyers save around $10,000 by not having to pay lenders’ mortgage insurance.

Announcing the new loan scheme last week, Mr Morrison said: “It can take nine to 10 years for an average household to save a deposit. We want to help Australians realise the goal of buying their first home by cutting years off the time it takes to save up.

“Our plan for a stronger economy means we can help secure the future of tens of thousands of first home buyers…

“Getting into the housing market is a point of pride for Australians and a rite of passage. It requires hard work and even harder saving, but we want to make it that bit easier.”

He continued: “While our First Home Super Saver Scheme has been about helping boost the savings of first home buyers and making buying a house more affordable, the new First Home Loan Deposit Scheme will help people achieve their goals years earlier.

“We want to help make the dreams of first home buyers a reality.”

The First Home Loan Deposit Scheme will offer up to $500 million in the form of equity through the National Housing Finance and Investment Corporation to focus on improving housing affordability.

The Labor Party had also said that it would look to match the scheme, as well as bring in its much maligned negative gearing and capital gains changes, should it be elected into power on Saturday.

Mortgage broker remuneration

The mortgage broking industry has been given a reprieve on the uncertainty centering around remuneration, given that the Coalition has said it would not look to fundamentally change broker commissions but instead undertake a review in three years’ time.

While the Coalition had initially said in its official response to the final report that it would ban trail commission payments for new mortgages from 1 July 2020, it later delayed any decision on fundamentally changing the structure of broker remuneration until three years’ time.

In March of this year, Treasurer Josh Frydenberg said that the government would look at reviewing the impacts of removing trail in three years’ time rather than abolishing it next year as originally announced, following concerns regarding competition.

He commented: “[F]ollowing consultation with the mortgage broking industry and smaller lenders, the Coalition government has decided to not prohibit trail commissions on new loans but rather review their operation in three years’ time”.

The review, to be undertaken by the Council of Financial Regulators and the Australian Competition and Consumer Commission will therefore look at both the impacts of removing trail as well as the feasibility of continuing upfront commission payments.

The Coalition government’s stance differs from Labor’s position, which has said it backs a fixed fee for upfront commissions [at 1.1 per cent] and a ban on trail commissions for new loans from 1 July 2020.

However, the Coalition and Labor Party did both support commissioner Hayne’s recommendations to introduce:

• a best interests duty that will legally obligate mortgage brokers to act in the best interests of consumers
• a new requirement that the value of upfront commissions be linked to the amount drawn down by consumers
• a ban on campaign and volume-based commissions
• a two-year limit on commission clawbacks starting from 1 July 2020

Affordable housing

As announced in the budget 2019-20, the Coalition will commit $1.7 billion to support state affordable housing services, with the vast majority ($1.56 billion) for the National Housing and Homelessness Agreement that helps improve access to “affordable, safe and sustainable housing across the housing spectrum, including to prevent and address homelessness, and to support social and economic participation”.

An additional $114.9 million will go to National Partn­­­erships in 2019-20 to support state affordable housing services, with $110 million for housing for Indigenous Australians in remote communities, particularly in the Northern Territory.

This will help address overcrowding, homelessness, poor housing conditions and severe housing shortages, according to the Coalition.

The Coalition has also earmarked $30 million to provide over 100 new social housing dwellings in Greater Hobart in partnership with community housing providers and allotted $37.5 million this year to South Australia to assist with costs associated with the provision of remote housing.

More to come.

[Related: PM announces new FHB loan deposit scheme]