KEYSTART —
INTEREST RATES
423. Hon Dr BRAD PETTITT to the Leader of the House
representing the Minister for Housing:
I
refer to the Reserve Bank of Australia's recent cash rate increase and
the subsequent announcement on 11 May 2022 to increase the Keystart
interest rate to 4.76 per cent, effective from 20 May 2022. This rate rise
comes at a time when households are experiencing increasing cost-of-living
pressures.
(1) Has the state
government considered and/or completed any modelling on the specific financial
risks faced by Keystart borrowers, given the RBA commitment to further interest
rate rises?
(2) Will the
government commit to review the Keystart interest rate policy to protect
low-income Keystart borrowers from excessive interest rate rises and better
reflect the RBA cash rate rather than the interest rates set by the four major
banks?
Hon SUE
ELLERY replied:
I thank the honourable member for
some notice of the question.
(1) Keystart
actively monitors its loan portfolio and the impact of external factors,
including interest rates. Keystart adjusts
its interest rate setting to align with the average standard variable interest
rate of the four major banks for all new applications. This interest
rate policy enables Keystart to offer low-deposit home loans, while managing
its lending risk responsibly.
Keystart undertakes responsible
lending practices and at the time of assessment an interest rate buffer is applied on top of the prevailing interest rate
when assessing customers' ability to service the loan repayments.
Keystart has additionally developed a
free Your financial wellbeing guide to interest rates to help its
customers understand interest rates, prepare them for interest rate increases
and support their goal to build equity and refinance with traditional lenders
when they are in a position to do so.
(2) The Department of Communities regularly reviews
Keystart policy settings to ensure it delivers government priorities and
supports people on low to moderate incomes to achieve home ownership.