First Home Saver Accounts open today

Homebuyers across the country can today start taking advantage of the Rudd Government’s new First Home Saver Accounts to help bring the dream of homeownership closer to reality.

First Home Saver Accounts are a key component of the Rudd Government’s $2.2 billion affordable housing package, which will also boost rental stocks and lower housing infrastructure costs for some entry level housing.

“We promised to take action on housing affordability, so it’s great to see these First Home Saver Accounts will provide real help to hundreds of thousands of young Australians trying to buy their first home,” Treasurer Wayne Swan said.

From today, the accounts will be offered by major financial institutions across the country – including ANZ, Commonwealth Bank, AMP, Members Equity and several credit unions.

The Treasury estimates that around $6.5 billion will be held in First Home Saver Accounts after four years. The Treasury also estimates that the take-up of First Home Saver Accounts will grow over time – with around 730,000 accounts being open in four years time.

, Tanya Plibersek said the Australian Government is investing $1.2 billion to support young people to buy their first homes through First Home Saver Accounts.

“The biggest barrier to home ownership is saving a deposit and First Home Saver Accounts will bring the dream of homeownership closer for hundreds of thousands of Australians,” Ms Plibersek said.

“First Home Saver Accounts are a practical way for young people to save a bigger deposit for a modest first home.”

The Government will provide a 17 per cent contribution on the first $5,000 of individual contributions made each year. This means that anyone who contributes $5,000 to their account will receive an $850 deposit from the Government.

Combined with a low tax rate of 15 per cent that is equivalent to superannuation, this means a couple both earning average incomes, putting 10 per cent of their income into individual First Home Saver Accounts, will be able to save more than $88,000 after five years depending on returns.

This is almost $13,000 more than they would have saved in a standard savings account.

Ms Plibersek said the accounts will be open for those aged between 18 and 65 and one of the real innovations of these accounts is that family members can contribute as well.

“One of the greatest hopes for Australian parents and grandparents is to see their children and grandchildren well settled in a home of their own,” Ms Plibersek said.

“Family members are able to contribute to young Australians’ First Home Saver’s Accounts – it’s a great 18th or 21st birthday present to help a young person start one of these accounts.

“As a grandparent, if you put $100 into one of these accounts for your granddaughter or grandson on their birthday, the Treasurer will give them another $17 as a birthday present.

“I would urge young Australians working part-time job to start putting $20 a week into one of these accounts if they can. Then when they start full-time work they can increase their contribution.”