Minister for Housing launches First Home Saver Accounts

Launching the First Home Saver Account (FHSAs) at NSW Teachers Credit Union yesterday, the Minister for Housing Tanya Plibersek told media the Treasury estimates that around 730,000 people will save around $6.5 billion over four years through First Home Saver Accounts, a tax advantaged product that debuted yesterday.

Not that many lenders have set up or begun to market the accounts. In an analysis of the few who have, the consumer group Choice rated only three institutions as meeting their benchmark: AMP, NSW Teachers and Victorian Teachers.

Choice said in a media release that not all accounts are created equally, using the ANZ example where customers are paid 6.99 per cent in bonus interest during months when deposits are made, and only 0.01 during non-deposit months.

The accounts feature a concessional tax rate of 15 per cent and a Federal Government co-contribution of up to $850 per year.

Louise Petschler, chief executive officer for the Australian mutuals industry association Abacus, is a supporter of the product.

"At the outset it is likely to be a niche product, but it's also a natural extension of mutual ADI's focus on helping their members become financially independent.

"As public awareness grows it could well become a core product for the first home buyer segment of mutual ADI members and prospective members."

Petschler adds it remains to be seen how profitable the new deposit product will be, and its potential take-up by first home buyers is unknown at this stage.

"But credit unions and building societies offering FHSAs are most certainly seeking to recover their development costs and to make a reasonable return on their FHSAs, both as a stand-alone product, and as a way to increase home lending."