We all know about JobKeeper, which helped Australians keep their jobs in a global crisis. So how about HomeKeeper?
Bipartisan support for temporary extra government spending to preserve businesses and jobs through JobKeeper was a rare positive outcome from the COVID-19 pandemic. Recognizing the long-term damage of short-term economic crises far exceeds the cost of temporary government spending, there is now consideration for a “HomeKeeper” program.
Given Reserve Bank Governor Michele Bullock’s recent message that interest rates could stay higher for longer than expected, a HomeKeeper program could help financially stressed mortgagees avoid losing their homes during the current interest rate crunch. It could also prevent them from joining already long rental queues, or worse, becoming homeless.
The proposed HomeKeeper program would involve the government taking a small equity stake in the property, equal to the value of the mortgage aid as a proportion of the property’s market value at that time. This would offer mortgage holders much-needed breathing space and a chance to retain their homes until interest rates ease. The assistance would be capped at $25,000 per family and would be repaid to the government when the property is sold or the owner is able to repay it.
This program would benefit low-income families the most, offering significant assistance relative to the size of their mortgage. In addition, the government would hold the equity stakes in a housing trust until they are repaid, reflecting the property’s capital value growth and making it a sound investment for taxpayers.
The need for a HomeKeeper program is clear, as current indicators of mortgage stress are partial and inconsistent. There is evidence of near-record numbers of homeowners experiencing stress, and assistance schemes in the past have not been on the scale or with the characteristics of the proposed HomeKeeper program.
While objections may arise, such as concerns about the impact on higher interest rates, the HomeKeeper program could be a necessary and effective solution to supporting vulnerable mortgagees who do not have access to family wealth or previous assistance programs.
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