Australian Property Podcast Show EP498- Labors Help To Buy Scheme Plus RBA Rate Rise

So today we saw a rate rise of 25 basis points which i think was to calm down all the inflation talk uh but i really want to elaborate on labor's plan of co-ownership today um so please note as always everything discussed here is done so for entertainment purposes only i've not taken into account your personal circumstances nor your risk profile so you should seek professional advice before making any investment decisions so today i want to talk about the rba rate move and also the labor shared equity ownership scheme um so firstly let's talk about the rate rise so that you went up by 25 basis points um and i personally think that we are going to see a slowdown on the back of this over the coming months not just really because of the rate rise but i think just on the back of weaker consumer confidence across the board um which is going to mean you know less demand and i think that also you know at some point rba is going to potentially start to see these issues as more supply side challenges and thus you know may not see increasing rates as the you know endless solution if you will um but that remains to be seen and um and i think the 0.25 today was really to satisfy a lot of the sort of calls that are happening around particularly in the media at the moment um around you know cost of living and inflation um so that's i guess the big news but what i wanted to talk about really was this um this shared equity scheme by labor so basically the policy is called help to buy and basically this is where the government will contribute up to 40 of the property price for a new property and up to 30 percent for an existing home and then will basically participate in that portion of the capital gain when the property is sold later on so the scheme would be made available not only to first home buyers but also people who've owned a home in the past to buy with a smaller deposit and a smaller mortgage because keeping in mind you know if the government still owns 40 you only have to finance the other 60 percent and um you know pay the mortgage um you know on that and so um even more interestingly i want to actually focus in on some comments uh from mark latham so um you know if you follow politics at all you probably know that he's with one nation these days i try not to get too political on this podcast but i want to mention that i'm an immigrant myself i believe that multiculturalism is one of the best things about this country um and so i am definitely not a one nation um supporter in general um but i wanted to talk about his comments today because i think his comments were very interesting um and he notes that in his words that there is a massive loophole because it is not means tested now basically means tested means whether the government is looking at what are the assets you hold um which can also be income generating assets um so basically what i'm going to do here is i'm going to quote him verbatim because you know we don't do financial advice on this podcast so his um word for word quote is the loophole is you sell your current home put the money in the stock market live on the dividends up to 120 000 a year and then you can buy with a 40 assistance from the government so about a 400 grand government subsidy a 950 000 new home in a place like nelson bay or port stevens so that's literally a word for word verbatim quote um and so yeah i thought that was quite interesting and further to that in an article that i was reading about this on sky news um he said that he had spoken to one of his sons about actually selling his existing home to put that money into the stock market to live on the dividends and then mark latham added again word for word it's pretty good going it's inequitable it's a loophole it's tempting um and so certainly some interesting comments and again verbatim and i just thought look um it's too juicy not to share um and so i guess just to elaborate a bit further on the scheme you know those who are eligible will need at least a two percent deposit and must still qualify for a standard home loan with the participating lender um and i note that this has just been announced so um you know there hasn't been uh any background commentary from banks to brokers on this that i've seen at the time of recording here as yet um so i mean this is all quite new and i'm not quite sure what i personally think of all of this as yet um you know in theory if you are an owner occupier and you don't care about the capital growth um then you know two percent deposit and the government kicking in 40 you know um it sort of you know makes sense in terms of getting a better property than you might have otherwise been able to afford uh so you know from that standpoint it is good um from the sort of property investment standpoint you know i think it is also good for stimulating the demand for housing uh particularly up to the thresholds for the caps so um you know i believe that's area dependent you know so the properties that are under the cap you know are going to have this um i guess boost from the government um and uh another thing that i was thinking about with this is that if the government is 30 or 40 percent of the title so 30 if it's an established property 40 if it's a new one then um you would think that the government is not going to be too keen on prices collapsing because they are you know part of the equity on the property and you know the applicant is only putting in two percent so you know if you're in for two percent and the government's in for 40 um you know the government is really uh a partner with you in that transaction so um you would think that the government would want to support um prices that being said you know the rba's key mandate is not just to support the property market or anything like that they are related to one uh inflation basically uh so certainly some interesting uh news today um and look the idea of you know what he's saying here selling up and you know putting the money in shares i won't and i can't advise on that um you need to look at someone else there there are obviously a lot of podcasts that focus on on that side of investing um and whether this is a good idea or not is you know you need to seek financial advice on that um i've not taken into account your personal circumstances nor your risk profile and i'm not a financial advisor and i'm not an accountant i provide um you know commentary on property market and credit only because i am a mortgage broker but look this article today i just thought was so juicy i thought i had to share it and i hope that some people also found this interesting i really appreciate you tuning in as always thank you so much