The First Home Super Saver Scheme (FHSSS) is failing to cut through to the first home buyers (FHB) market, with 56 per cent of Australians unaware of the initiative, according to a national Gateway Bank survey.
First announced in the budget last year, the scheme will enable FHBs to contribute up to $30,000 (but no more than $15,000 a year) to their superannuation account, with FHB couples eligible to contribute up to $60,000.
FHBs will be able to access their tax-exempt voluntary superannuation contributions from 1 July 2018.
The Gateway Bank research, which involved a survey of 1,000 Australians, also revealed that of the respondents that were aware of the FHSSS scheme, only 1 per cent could directly identify its components.
Further, the survey revealed that Baby Boomers were most aware of the scheme (36 per cent), followed by Millennials (34 per cent) and Generation X (30 per cent).
Gateway Bank CEO Paul Thomas said that the government needs to better promote the scheme to ensure that FHBs reap its benefits.
“The scheme is a good idea in principle, but in order to make a real impact, the government and industry need to take action to ensure the public is not only aware of the scheme but are also educated on how they can take practical steps to take advantage of the initiative.
“It’s imperative to take an early intervention approach to education around the initiative; otherwise, by the time first home buyers look into their first mortgage, it will be too late.”
FHBs making a comeback
However, while FHBs may not be widely familiar with the FHSSS, there are signs that first home buyers will make a large proportion of mortgagors in the next year.
Nearly a third (30 per cent) of consumers taking out a home loan in the next year will be first home buyers (FHBs), according to an Aussie Home Loans survey of 600 Australians aged 24 to 55 who intend to take out a mortgage in the next 12 months.
Refinancers will be the second-largest group of consumer looking for a home loan (25 per cent), followed by investors (24 per cent) and movers (22 per cent).
Aussie CEO James Symond said that there was a range of factors luring FHBs into the housing market.
“The slight cooling of some of our larger property markets, current record low interest rates, growing choice and complexity in home loans, and improved first home buyer grant schemes would all be factors,” Mr Symond said.
Further, Aussie revealed that an increasing proportion of FHBs intend to use a mortgage broker to secure their loan.
“Year-on-year, we’ve had a 55 per cent increase nationally in the number of first home buyers using an Aussie broker,” Mr Symond said.
“This is a hugely positive sign and shows savvy newcomers to the market are seeking out expert mortgage advice and guidance.”
Further, the research revealed that the FHB segment takes longer than any other group to settle a home loan.
According to the data, on average, FHBs take 100 days to settle a loan, 35 per cent longer than the average borrower refinancing their loan.
“We know first home buyers often need more education and support so they can feel confident in selecting the right home loan,” Mr Symond added.
Indeed, the research found that FHBs feel less confident about comparing and selecting the right home loan, and were least confident about the current economic climate.
Mr Symond therefore highlighted the role that mortgage brokers play in educating clients and assisting them through the home loan process.
“Some first-time buyers want to be educated steadily and taken through the mortgage process step by step, while others want to outsource as much as possible so it’s quick, easy and requires little of their time,” Mr Symond said.
“Saving customers money, time and hassle are key elements of Aussie’s proposition, and I believe this is why we’re seeing such strong growth in first home buyer activity.”
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Charbel Kadib is the news editor on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.