❓ Mr. Nalder questions the Minister for Housing about Keystart interest rate increases despite official rate cuts, suggesting Keystart mortgage holders are paying more and that this funds bad debts. The Minister defends Keystart, attributing the rate structure to a policy of not being a long-term lender and criticizes the previous government's securitization of the loan book.
AnsweredQoN 876Legislative Assembly
QuestionView source ↗
INTEREST RATES —
KEYSTART LOANS
876. Mr D.C. NALDER to the Minister for Housing:
According to the Housing Authority's
2019 annual report, the weighted average interest rate for mortgage holders in
Keystart increased by over 0.2 per cent in 2018–19 over 2017–18,
in an environment in which there was an official interest cut of 0.25 per cent.
Can the minister explain why struggling Keystart mortgage holders are now
paying higher interest rates and over $5 000 per annum more in interest
payments to the state government than they would be to other financial
institutions; and, is this to fund growing bad debts in Keystart's loan
book?
KEYSTART LOANS
876. Mr D.C. NALDER to the Minister for Housing:
According to the Housing Authority's
2019 annual report, the weighted average interest rate for mortgage holders in
Keystart increased by over 0.2 per cent in 2018–19 over 2017–18,
in an environment in which there was an official interest cut of 0.25 per cent.
Can the minister explain why struggling Keystart mortgage holders are now
paying higher interest rates and over $5 000 per annum more in interest
payments to the state government than they would be to other financial
institutions; and, is this to fund growing bad debts in Keystart's loan
book?
AnswerView source ↗
I
thank the member for the question. I pick up where the Treasurer left off by
saying that this area has a longstanding history, and bipartisan
support, I should say. The Keystart loan book is in its thirtieth year and has
delivered over 102 000 loans to Western Australians who otherwise would not
have got into a home.
Mr D.C. Nalder : Why have
interest rates gone up?
The SPEAKER : Member for
Bateman!
Mr P.C. TINLEY : As the
Treasurer also identified, we use a longstanding formula which uses the
averages of the big four banks. Why is that
so? It is simply so that we are not seen as a long-term lender. We are not the
provider of an enduring 25-year mortgage. The absolute objective of the
Keystart loan book is to move people through the loan book. The average of the
big four provides an incentive for a better deal as soon as they are ready to
leave the loan book. The average time in the Keystart loan book is quite short.
It is measured in less than five years, and I will get the exact numbers for
the house in due course.
The
other point to note, though, is that when the former Liberal–National
government securitised $1.3 billion of the loan book, the former Treasurer, the member for Riverton—who
sits behind the member for Bateman—locked people into an
interest rate that was very difficult to move. When something like that is sold
off and, I might add, the very best parts of the loan book with the best
returns are sold off to the private sector—a longstanding Liberal–National
government trait is to sell off the best bits—and the interest rates
that people have to pay are locked in, that is a disservice. We also have to
include in our annual accounts the $1.3 billion loan book that we are also
managing—thanks for that one—on behalf of the bank that we sold
it to. That might account for some of the member's mathematics. I would
ask the member to have a very hard look at his numbers, because my staff are
going through it right now. Is he suggesting that there is an additional $5 000
a year on the average loan of a Keystart borrower? I will take the interjection
if the member wants to correct me.
Mr D.C. Nalder : You answer
how you like.
Mr P.C. TINLEY : The member is
saying that one-quarter of one per cent equals $5 000. That might be an indicator
for why the member should never be Treasurer of the state. A real problem is
going on here, member. The opposition does not want to support Western Australians
getting home ownership. The objective of Keystart is to get people into homes;
it is not to be a long-term lender. We will continue to support it. We are very
proud of that record. The Keystart loan book is a 30-year initiative of a former
Labor government. It has survived transitions of administrations. The
opposition should be very careful about how it rocks the boat.
thank the member for the question. I pick up where the Treasurer left off by
saying that this area has a longstanding history, and bipartisan
support, I should say. The Keystart loan book is in its thirtieth year and has
delivered over 102 000 loans to Western Australians who otherwise would not
have got into a home.
Mr D.C. Nalder : Why have
interest rates gone up?
The SPEAKER : Member for
Bateman!
Mr P.C. TINLEY : As the
Treasurer also identified, we use a longstanding formula which uses the
averages of the big four banks. Why is that
so? It is simply so that we are not seen as a long-term lender. We are not the
provider of an enduring 25-year mortgage. The absolute objective of the
Keystart loan book is to move people through the loan book. The average of the
big four provides an incentive for a better deal as soon as they are ready to
leave the loan book. The average time in the Keystart loan book is quite short.
It is measured in less than five years, and I will get the exact numbers for
the house in due course.
The
other point to note, though, is that when the former Liberal–National
government securitised $1.3 billion of the loan book, the former Treasurer, the member for Riverton—who
sits behind the member for Bateman—locked people into an
interest rate that was very difficult to move. When something like that is sold
off and, I might add, the very best parts of the loan book with the best
returns are sold off to the private sector—a longstanding Liberal–National
government trait is to sell off the best bits—and the interest rates
that people have to pay are locked in, that is a disservice. We also have to
include in our annual accounts the $1.3 billion loan book that we are also
managing—thanks for that one—on behalf of the bank that we sold
it to. That might account for some of the member's mathematics. I would
ask the member to have a very hard look at his numbers, because my staff are
going through it right now. Is he suggesting that there is an additional $5 000
a year on the average loan of a Keystart borrower? I will take the interjection
if the member wants to correct me.
Mr D.C. Nalder : You answer
how you like.
Mr P.C. TINLEY : The member is
saying that one-quarter of one per cent equals $5 000. That might be an indicator
for why the member should never be Treasurer of the state. A real problem is
going on here, member. The opposition does not want to support Western Australians
getting home ownership. The objective of Keystart is to get people into homes;
it is not to be a long-term lender. We will continue to support it. We are very
proud of that record. The Keystart loan book is a 30-year initiative of a former
Labor government. It has survived transitions of administrations. The
opposition should be very careful about how it rocks the boat.
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