HomeStart Finance, which is backed by the South Australian government, told the federal Inquiry into Home Ownership that its assisted-finance model should be rolled out across Australia.
HomeStart makes it easier for buyers to access finance by offering loan-to-value ratios (LVRs) of 97 per cent and by accepting alternative income sources such as Centrelink benefits.
Chief executive John Oliver said home ownership rates could be improved by a federal program aimed at increasing access to affordable finance.
That would require the federal government to provide support with funding and lending, Mr Oliver added.
“Nationally, affordable housing policy typically leaves the provision of finance entirely up to the private sector,” he said.
“HomeStart’s experience and results demonstrate there is a role for government to play in providing a stepping stone for customers to move from private rental or other accommodation into assisted home ownership.”
HomeStart has generated a profit every year since it was founded in 1989, and more than 80 per cent of its customers would have been unable to qualify for a mainstream loan.
“These buyers, typically on low-to-moderate incomes, require home finance which overcomes barriers to home ownership, such as deposit, start-up costs and borrowing capacity,” Mr Oliver said.
“Once assisted, the vast majority become reliable payers, with many quickly building enough equity in their home to refinance with a major lender.”