Double edged sword

By: Justdrew (Registered ) on 23-09-2007 23:14

When the federal Government increased the first home buyer's grant to $14 000 prices went through the roof. There was no longer a need to save for a deposit as the grant covered that problem. Many people took advantage of this but lacked the financial discipline to budget effectively and therefore service the loan once the honeymoon interest rates ended. It also increased the price of established homes. Many people relied on the capital growth of their home to justify borrowing at the upper limit of their income. With Work Choices eroding job security and casualising the work force mortgage stress was bound to increase. Perhaps the solution is to offer tax deductions on home loans for owner occupiers providing the borrower pays capital gains tax on the sale of the property. This may take some of the speculators out of the food chain.

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