Homebuilder subsidy extended, but payment whittled down

Homebuilder subsidy extended, but payment whittled down

Thousands of homes could have their renovations subsidised after the government announced an extension to its $921 million Homebuilder program -- only, the grants paid will be smaller.

About 15,000 more homes could be renovated or built under the revised HomeBuilder subsidy, after the federal government announced it will be extended for a further three months until 31 March, 2021.

Prime Minister Scott Morrison said the subsidy will help stimulate the construction sector during the COVID-19 pandemic, an industry that contributes $100 billion a year and represents about 5 per cent of the Australian gross domestic product.

“We’re keeping people in jobs and putting Australians’ dream homes within reach,” Mr Morrison said. “It’s critical we keep the momentum up for Australia’s economic recovery.”

Worth 60 per cent of the original

The Homebuilder subsidy, part of the government’s economic recovery plan for dealing with the COVID-19 pandemic, will be dropped from $25,000 to $15,000 from 1 January to 31 March, 2021.

To be eligible for the grant, from $150,000 to $750,000 would have to be spent building or renovating a new home. However, the maximum cap has been lifted for a couple of states, rising to $850,000 for Melbourne and $950,000 for Sydney.

Construction work was originally required to begin within three months of contracts being signed, but the requirements have since been relaxed. All eligible contracts signed on or after 4 June 2020 can now break ground within six months and still receive the grant.

Contracts signed before 29 November must be carried out by builders with licences registered before 4 June 2020, but contracts signed thereafter can be completed by builders who obtained their licence at a later date.

Aiming for 42,000 new builds and renovations

The government estimates a total of 42,000 residential homes will have their construction or renovation subsidised by the homebuilder grant.

Michael Sukkar, the minister for housing and assistant treasurer, said the government had received 23,877 applications as of 20 November, putting it on track to surpass its original target of 27,000.

“This is a temporary and targeted programme and we want to give buyers the confidence and support to enter the market right now at a time when the economy needs it most.”

Most Homebuilder recipients -- about four-fifths -- are using the grant to build residential homes; the majority in Victoria, followed by Queensland and New South Wales.

Homebuilder statistics as of 20 November, 2020. Source: Commonwealth Treasury

State New build Renovations Total




































Homebuilder's extension is forecast to subsidise a further 15,000 projects at a cost to taxpayers of $241 million, pushing the total cost to $921 million.

More work to the home, more work for builders

The decision to extend homebuilder was generally welcomed by the building industry, even though the payment has been reduced.

The Housing Industry Association (HIA), the body advocating for the residential building sector, estimated the extension of homebuilder would contribute about $6 billion in construction work to the Australian economy.

“(Our) forecasts predicted a significant drop in housing demand in 2021 as HomeBuilder projects finished,” Graham Wolfe said, managing director of HIA.

“This extension will ensure that the demand is carried forward to 2021 and activity will continue throughout the year.”

A HIA report released in November found Homebuilder had propped up the housing market. In the three months to October, new home sales lifted by 31.6 per cent when compared to a year earlier.

The Property Council of Australia (PCA), an advocacy group representing the interests of more than 2200 property groups, said the extension will mitigate a shortfall in construction work brought about by halted immigration and slowing population growth -- especially in the states impacted the hardest by the COVID-19 pandemic.

“The extension of the deadline for commencement is very welcome as it will allow more homes to enter the pipeline,” Ken Morrison said, chief executive of PCA.

“The increase of the price cap for new builds in NSW and Victoria is a sensible move that will give more Australians access to new homes and boost jobs and recovery across the two states that have been impacted most by the pandemic.”

Did you find this helpful? Why not share this news?



Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the ratecity.com.au Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy


Learn more about home loans

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Savings over

Select a number of years to see how much money you can save with different home loans over time.

e.g. To see how much you could save in two years by switching mortgages,  set the slider to 2.

Monthly Repayment

Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.

Can I refinance if I have other products bundled with my home loan?

If your home loan was part of a package deal that included access to credit cards, transaction accounts or term deposits from the same lender, switching all of these over to a new lender can seem daunting. However, some lenders offer to manage part of this process for you as an incentive to refinance with them – contact your lender to learn more about what they offer.

What is an ombudsman?

An complaints officer – previously referred to as an ombudsman -looks at formal complaints from customers about their credit providers, and helps to find a fair and independent solution to these problems.

These services are handled by the Australian Financial Complaints Authority, a non-profit government organisation that addresses and resolves financial disputes between customers and financial service providers.

How much of the RBA rate cut do lenders pass on to borrowers?

When the Reserve Bank of Australia cuts its official cash rate, there is no guarantee lenders will then pass that cut on to lenders by way of lower interest rates. 

Sometimes lenders pass on the cut in full, sometimes they partially pass on the cut, sometimes they don’t at all. When they don’t, they often defend the decision by saying they need to balance the needs of their shareholders with the needs of their borrowers. 

As the attached graph shows, more recent cuts have seen less lenders passing on the full RBA interest rate cut; the average lender was more likely to pass on about two-thirds of the 25 basis points cut to its borrowers.  image002

How personalised is my rating?

Real Time Ratings produces instant scores for loan products and updates them based what you tell us about what you’re looking for in a loan. In that sense, we believe the ratings are as close as you get to personalised; the more you tell us, the more we customise to ratings to your needs. Some borrowers value flexibility, while others want the lowest cost loan. Your preferences will be reflected in the rating. 

We also take a shorter term, more realistic view of how long borrowers hold onto their loan, which gives you a better idea about the true borrowing costs. We take your loan details and calculate how much each of the relevent loans would cost you on average each month over the next five years. We assess the overall flexibility of each loan and give you an easy indication of which ones are likely to adjust to your needs over time. 

Do other comparison sites offer the same service?

Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.

How does Real Time Ratings work?

Real Time RatingsTM looks at your individual home loan requirements and uses this information to rank every applicable home loan in our database out of five.

This score is based on two main factors – cost and flexibility.

Cost is calculated by looking at the interest rates and fees over the first five years of the loan.

Flexibility is based on whether a loan offers features such as an offset account, redraw facility and extra repayments.

Real Time RatingsTM also includes the following assumptions:

  • Costs are calculated on the current variable rate however they could change in the future.
  • Loans are assumed to be principal and interest
  • Fixed-rate loans with terms greater than five years are still assessed on a five-year basis, so 10-year fixed loans are assessed as being only five years’ long.
  • Break costs are not included.