Territory Stories

Debates Day 2 - Wednesday 2 March 1994

Details:

Title

Debates Day 2 - Wednesday 2 March 1994

Other title

Parliamentary Record 25

Collection

Debates for 6th Assembly 1990 - 1994; ParliamentNT; Parliamentary Record; 6th Assembly 1990 - 1994

Date

1994-03-02

Notes

Made available by the Legislative Assembly of the Northern Territory

Language

English

Subject

Debates

Publisher name

Legislative Assembly of the Northern Territory

Place of publication

Darwin

File type

application/pdf

Use

Attribution International 4.0 (CC BY 4.0)

Copyright owner

Legislative Assembly of the Northern Territory

License

https://creativecommons.org/licenses/by/4.0/

Parent handle

https://hdl.handle.net/10070/279526

Citation address

https://hdl.handle.net/10070/418761

Page content

DEBATES - Wednesday 2 March 1994 industry is operating, and it is within the market segment that the government's revised scheme will operate. The amended First Mortgage Scheme retains the base 5% commencing rate, but introduces interest rates linked to movements in the consumer price index as a mechanism to ensure continuing affordability of the loans. In other words, interest rates will no longer increase automatically by 0.5% per annum until the maximum rate is reached. Instead, the annual rate of increase will be determined by economic factors with the prime consideration being the affordability of repayments. Maximum borrowing limits are increased in recognition of increasing housing prices. The continuing affordability of loans has been tested against the income brackets of the client groups, maintaining affordability over the life of the loan at between 25% and 35% of income. In summary, the revised and expanded HomeNorth First Mortgage Assistance Scheme will provide loan amounts, consistent with long-term affordability considerations, of between $80 000 and $90 000 to clients with gross incomes of between $300 and $600 per week. The following control mechanisms will apply. The commencing low start interest rates, ranging from 5% to the ruling bank rate, will be based on income. The annual interest rate increment will be determined by the government from time to time, but will not exceed 0.5% in any one year. The maximum to which the interest rates will rise above the Commonwealth Bank variable home lending rate will also be determined by the government, but will not exceed 1% above the Commonwealth Bank rate. The upper limit in property value under the scheme will remain $120 000. In regard to the need to escalate the maximum interest rate above the Commonwealth variable home lending rate, honourable members should note that this scheme operates under the Commonwealth State Housing Agreement and therefore certain provisions require the recoupment of subsidy over the period of the loan. That is the reason for that interest rate structure. This is the Territory government's approved mechanism for complying with CSHA requirements, but flexibility has been built into the scheme's structure to allow appropriate adjustment of rates relative to period shifts in the controlling economic climate - that is, the shifting regimes of ruling interest rates and the consumer price index. I can advise members that we have received approval from the federal minister, Hon Brian Howe, for these adjustments as they conform with CSHA guidelines. Mr Speaker, I turn now to the HomeNorth Sales Scheme and I table that brochure. The sales scheme, which operates outside the Commonwealth State Housing Agreement, has been adjusted to make it consistent with the principles for the first mortgage vehicle except for the following: the ceiling interest and maximum commencing interest rates are capped below the Commonwealth Bank benchmark for income groups up to $900 per week; there are no limits to gross family income; maximum loan amounts are increased for some income groups, consistent with client affordability; restrictions in respect of prior home ownership are removed; and the value of the property is not restricted to the maximum of $120 000. As honourable members would be aware, the sales scheme is a vendor finance scheme for Housing Commission tenants to buy their Housing Commission homes. It consists of a loan of up to 95% of the purchase price, starting at low interest rates for low-income earners. It is an important incentive scheme for those who may have thought in past times that they would only ever be Housing Commission tenants, through necessity or choice, to consider seriously the option of home ownership. The changes I have mentioned remove unnecessary restrictions under the scheme and provide real incentives for tenants looking to buy their Housing Commission properties. 11 315


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