Commonwealth stops selling first-home saver accounts

The liberalisation of the first-home saver account scheme earlier this year has not been enough to keep Commonwealth Bank in the market. The bank has withdrawn the product from sale, although it will continue to service existing customers.

A spokesman for the bank said customers found the product confusing and restrictive. Most customers saving for a home loan preferred to use other savings products.

First Home Saver Accounts (FHSAs) were introduced in October 2008, as part of a package aimed at alleviating the impact of the financial crisis. First-home buyers qualify for concessional tax treatment and government contributions if they contribute to their FHSA over four financial years.

A drawback with the original scheme was that if an account holder bought a house before the four-year eligibility period was up, the money in the FHSA would have to go into the person's superannuation account.

In last year's Budget, the Government said it would make the system more flexible, allowing money saved in an FHSA over four years to go into a mortgage if a house had been purchased prior to meeting the release conditions.

Amendments to the First Home Saver Account Act were passed in May and the changes to the scheme have applied to houses purchased since May 25.

According to the most recent data, from the Australian Prudential Regulation Authority, there were 27,400 first-home saver accounts open in March, with a total balance of $173.4 million.  Seventeen approved deposit-taking institutions offer the product.