The federal government’s budget for 2022-23 has been welcomed by some leaders in the broker space, with housing affordability and apprenticeship support more particularly flagged as benefits for brokers.
On Tuesday evening (29 March), federal Treasurer Josh Frydenberg handed down the Morrison government’s 2022-23 budget, outlining its plans to help grow the Australian economy for a “stronger future” should it remain in power following the upcoming federal election.
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The budget laid out a $17.9 billion committed towards new and existing infrastructure projects, as well as an increase to tax offsets for lower and middle income earners, and cost of living relief for pensioners and welfare recipients.
Among the key measures relating to the home loan market was an additional commitment to the government’s Home Guarantee Schemes, which aim to help more Australians buy their own home sooner without needing to pay lender’s mortgage insurance (LMI).
Preliminary reaction to the pre-election budget from members of the broking community has so far been tentatively welcoming – particularly around the measures provided to help a larger number of home buyers access LMI-free mortgages with smaller deposits.
Boosting cost of living and affordable housing a welcome move: FBAA
Peter White, the managing director of the Finance Brokers Association of Australia (FBAA), said that he thought the pre-election budget was fairly positive, overall.
Speaking to The Adviser, Mr White particularly welcomed the extension of the guarantee schemes and the $2 billion for the National Housing Finance and Investment Corporation to support affordable housing.
“I’ve been concerned in regards to increasing interest rates and how that’s going to impact people, so I think all these measures will play well for supporting people with their rent payments and mortgage repayments and/or getting in the market,” he said.
“The key takeaways for the broker channel are primarily focused around how they can help borrowers with the guarantee schemes. But then there’s a whole host of initiatives that play out well from a cost-of-living point of view, from a small business point of view, and for families, that will all impact their serviceability capability in getting a loan.”
“Some of these reforms are short term [such as the fuel excise] and some of them are longer term [such as the provision for apprenticeships and tax relief], but it will be interesting to see the cumulative impact of all these different measures on people’s household expenditures and their cost of living,” he added, particularly flagging the impact on household expenditure measures and the potential for these to be “at a more improved position” from a serviceability perspective off the back of this budgetary support.
Guarantee schemes should welcome more lenders: Loan Market
As well as welcoming the extension of the guarantee schemes and their ability to give home buyers a “leg up”, the managing director of aggregation group Loan Market, Andrea McNaughton, suggested that more places could be offered to a wider range of lenders and that more places could have been available under the Family Home Guarantee.
Speaking of the first home buyers guarantee, Ms McNaughton commented: “What our brokers have noticed in the past is the limited number of places offered across a concentrated volume of participating lenders,” she said.
“We would like to see the scheme spread more widely, providing more choice and positive outcomes to customers.”
Ms McNaughton continued that while she welcomes that the Family Home Guarantee is being increased, providing “stability for families – especially as rents across Australia rose 15.3 per cent since the pandemic”, she added that 5,000 places were “not a huge amount of places”.
“Brokers will again need to manage expectations around this initiative. Single parents need to understand that lenders will still heavily scrutinise their capacity to service a loan, especially if they have multiple dependants. Having a 2 per cent deposit in the bank, alone, won’t be enough,” she said.
Brokers could hire more support with apprenticeship support
Both the FBAA MD and the MD of Loan Market applauded the government’s support for apprenticeships (providing $5,000 payments to new apprentices and up to $15,000 in wage subsidies for employers that take them on), which they said would enable more brokers to hire new staff.
Mr White highlighted the $1.6 billion in tax relief to support small businesses to “go digital” and upskill their employees, as well as support for apprenticeships and the government’s Skills and Training Boost (which encourages small businesses to train new staff and upskill existing staff) could help business owners grow.
“Overall, I think there are some very, very positive things for SMEs. Brokers are small business people, so anything that ticks that box to help support them better are always good things,” Mr White said.
Similarly, Ms McNaughton commented the apprenticeships scheme was “a great opportunity for brokers to scale their businesses with support personnel studying a Certificate II or higher”.
“Over the last year, brokers who have taken on trained support personnel have been able to sustain added demand and grow their businesses sustainably with staff who add true value to their operations,” she said.
Moreover, starting on Tuesday (29 March), the government said that for every hundred dollars a small business spends on training their employees, they will get a $120 tax deduction.
Other budget factors that the Loan Market MD said brokers should bear in mind for the clients include increased childcare subsidies, which could support more parents to return to work and “start financial journeys over the coming 12 months”, and fuel excises (cut in half for the next six months to help save 22¢ a litre), which could benefit small businesses.
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