Shadow Minister for Housing & Homelessness Jason Clare has urged the Government to develop plans to stop people being foreclosed on.
These plans would be similar to what the UK and the US introduced recently, passing emergency legislation to ensure renters and mortgage holders are not forced out of their home if they fail to pay rent or their mortgage.
The UK government announced this week a three-month 'mortgage payment' holiday, while US mortgage backers have halted foreclosures for 60 days.
Last night, President Trump announced a moratorium on all foreclosures and evictions for single family homeowners with Federal Housing Administration-insured mortgages for that period.
For renters in the UK, landlords will not be able to start eviction proceedings for at least three months.
These are much needed measures in Australia and these measures would prevent a total housing collapse, according to Mr Clare.
"More Australians are behind in their mortgage repayments today than at any time since the Global Financial Crisis, and rental stress is through the roof," he said.
"In addition to that, they should also take steps to make sure no one has their power, water gas or phone cut off because they, or their family, are affected by the virus and can't pay the bill.
"A practical plan needs to be developed as quickly as possible tailored to the situation in Australia."
Shadow Minister for Housing @JasonClareMP says Labor is urging the National Cabinet and the banks to immediately develop and implement a plan to help ensure people don’t lose the home they own or rent because of the virus #auspol #COVID2019AU pic.twitter.com/dgS6K3v9Zm— Political Alert (@political_alert) March 19, 2020
This suggestion comes at the same time the Reserve Bank cut the cash rate twice in one month for the first time.
The cash rate sits at 0.25%, theoretically making mortgages cheaper as lenders slash their interest rates.
Looking to refinance your home loan? Below are variable owner-occupier loans with some of the lowest interest rates in the market.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) owner-occupied home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
The changes recommended by Labor are similar to those proposed by the Greens, with Greens spokesperson for Housing, Senator Mehreen Faruqi, calling for emergency measures to support renters during the pandemic.
Ms Farqui's suggested measures include:
- An eviction moratorium: State and Territory laws govern evictions with most allowing for eviction if the tenants are 14 days or more behind with their rent. This should be scrapped immediately
- Fund crisis housing: The Federal Government must increase homelessness funding under the National Housing and Homelessness Agreement to $500 million per year and release these funds immediately to States and Territories
- Freeze rents: A nationwide rent freeze with no increase in rent from the start of 2020 and for the duration of the health crisis.Commonwealth Rent Assistance (CRA) should also be increased.
“In the developing crisis, the government has a responsibility to ensure that no one ends up at risk of homelessness or further rental stress. We must take immediate steps to ensure that no one can be evicted," she said.
I'm calling for a moratorium on all evictions, a nationwide rent freeze and more funding for crisis housing to get us through the #coronavirus crisis.— Mehreen Faruqi (@MehreenFaruqi) March 17, 2020
Now more than ever, people must be guaranteed a roof over their head and a safe and secure home #auspol pic.twitter.com/GCF8eOOSxf
During a health crisis, people without a roof over their heads risk exposing themselves or others to the disease.
Real Estate Institute of Queensland (REIQ) Chief Operations Officer Josh Callaghan told Savings.com.au yesterday that governments, banks, tenants and property owners all need to work together to find solutions that prevent people from entering into homelessness.
"The REIQ's goal is to ensure all Queenslanders, and Australians, have safe, secure housing and during this unprecedented event all parties need to work together to ensure our housing market is sustainable."
Prime Minister Scott Morrison is set to announce a second round of stimulus: Changes like the ones recommended could be included.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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