WA:No concern over low-deposit loans: Buswell

AAP General News (Australia)
08-16-2011
WA:No concern over low-deposit loans: Buswell

PERTH, Aug 16 AAP - West Australian Housing Minister Troy Buswell is confident a new
low-deposit home loan won't put the state on the same path as subprime mortgages in the
US.

WA's Bankwest has launched a new home loan exclusively for the state's first home buyers
which will require only a three per cent deposit on the value of the property.

Mr Buswell said the low deposit rate, which is well under the normal 20 per cent rate,
would help many first home buyers aspiring for home ownership overcome a significant hurdle.

"Home ownership is a great aspiration we need to keep alive in our state, especially
for young West Australians," he told ABC Radio.

"More broadly as a state we need to be building houses because if we don't build enough
houses we get pressure in the property sector and that pressure at the moment is on rents."

Mr Buswell brushed aside concerns the new low deposit home loan could bring in first
home buyers who will possibly struggle to meet the mortgage repayments.

Subprime lending to home owners in the US has been blamed as one of the factors in
the global financial crisis, with high default rates by those could not meet mortgage
repayments.

Bankwest said it had put in place strict lending criteria including a minimum annual
income threshold of $80,000.

Mr Buswell said the loan would have to meet the requirements of the Australian Prudential
Regulation Authority.

But from the experience of the WA government's Keystart home loans, which offer a four
per cent deposit, there was a relatively low rate of defaults, he said.

"Of course people will have to be careful and cautious when they enter into these sorts
of arrangements," Mr Buswell said.

"Banks do have obligations, broader social obligations, but also obligations to the
regulator and their shareholders not to lend money that's going to present undue risk."

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KEYWORD: LOANS

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