During the global financial crisis the Federal Government followed many developed nations by introducing a home loan guarantee. The home loan guarantee was set up to protect borrowers from the worry of their lender collapsing by the government financially backing the financial institution if it was in trouble.
It also helped lenders acquire funding because offshore investment vehicles could rely on the assurance of the home loan guarantee. This helped prevent an increase in interest rates and bigger restrictions on lending criteria. The home loan guarantee was a temporary support set up to be in place only while the world’s financial markets are volatile. Up until February 2012 deposits of up to and including $1 million were guaranteed uunder the Australian government financial claims scheme.
While the emergency guarantee of $1 million has now ceased, the financial claims scheme still applies but a new permanent cap of $250,000 per person or institution guarantee now applies.
The financial claims scheme applies to a range of deposits including;
- Conventional cheque accounts
- Conventional savings accounts
- Conventional term deposits
- Standard fixed rate term deposit
- Debit card accounts
- First home savers deposit account
- Retirement savings account
- Pass-book savings account
- Personal basic account
- Cash management account
- Farm management deposit
- Cash management accounts
- Internet-based savings account
- Bonus incentive investment accounts
- Mortgage offset accounts
- Trustee accounts
- Other transaction accounts
To find out more information about the financial claims scheme visit Australian Government Guarantee scheme for large deposits.
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