The Federal Government has taken the axe to a generous savings scheme for first home buyers, but will lift restrictions on the ability for account holders to access their money.
The Government says there will be a saving of $134.3 million over five years by abolishing the Savers Accounts created by the First Home Buyers. These were introduced in 2008 to help first home buyers save and pay off their mortgage. Before the accounts are abolished in July 2015, the scheme will be wound down.
Eligibility for the 17 per cent government contribution will stop from the start of July this year.
First Home Savers Account holders were only able to access their funds after four years, which was to be put towards an approved mortgage or to contribute to their superannuation and only for the purchase of a first home. But as of July 2015, they will be able to withdraw their funds without such restrictions.
In an attempt to tighten up on people exploiting the changes, accounts opened from the time Treasurer Joe Hockey began delivering his budget speech at 7.30pm on Tuesday will not be eligible for any concessions or government contributions. The accounts were initially offered by two of the big four banks, ANZ and the Commonwealth Bank, as well as a number of credit unions, the Commonwealth Bank eventually scrapped them.
It is recognised that a lack of take-up from customers was due to the axe, with savers not impressed by being unable to access funds for four years.
Revealing the scheme in 2008, then-treasurer Wayne Swan predicted the accounts would hold $4 billion after four years. But statistics from the Australian Prudential Regulatory Authority show in the December quarter, just $521.5 million was held in 46,000 accounts.
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