First Home Saver Accounts are designed to help you own a home sooner, by offering a better way to save a deposit for your first home.

Aspiring first home buyers can now take advantage of the government's new First Home Saver account scheme, which launched on 1st October 2008.
 
"We promised to take action on housing affordability, so it's great to see these First Home Saver accounts will provide real help to hundreds of thousands of young Australians trying to buy their first home," Treasurer Wayne Swan said today.

"First Home Saver accounts are a practical way for young people to save a bigger deposit for a modest first home."

What is a first home saver account?

Offering a lower rate of tax on interest earned (similar to superannuation), and Government contributions to boost savings, First Home Saver accounts can help would-be first home buyers achieve their savings goal for a deposit on their first home sooner, bringing the dream of homeownership closer to reality.

First Home saver accounts offer:

• Bonus money from the Government - Savings up to $5,000 in a financial year are matched by the Government pitching in 17% on top. So for every $1,000 saved you could receive another $170 into your First Home Saver account, up to a maximum of $850 each year.
• Interest earned is taxed at a low rate – Interest or earnings on the savings in a First Home Saver account are taxed at just 15%, not at your marginal tax rate like in a regular bank account or managed investment.

First home saver accounts have been designed by the government to provide a special way to save to buy or build your first home, by taking advantage of government contributions to your savings and a lower rate of tax on your interest or earnings. You can learn more about how First Home Saver accounts work and all the rules that apply, for instance savings can only be used to buy or build a home that you will live in (not for investment property), and only after you have saved for at least 4 financial years.

To calculate the savings potential a First Home Saver account has over regular savings accounts check out the First Home Saver account calculator.

Who is providing First Home Saver accounts?

From 1st October 2008, different types of financial institutions can offer first home saver accounts:

• Deposit style accounts - offered by banks, credit unions and building societies
• Market-linked investment accounts - offered by super funds, life insurance companies and friendly societies.

Some of the major banks along with several credit unions are already on board, and it’s expected that super funds and others will also be offering First Home Saver accounts in the near future.

The Australian Prudential Regulation Authority (APRA), provides a current list of first home saver account providers.

You can sign up to our FREE Home Saver Alert to stay up to date.

First Home Saver accounts will be available from 1st October 2008, and are set to provide struggling savers with a better way to build a deposit for their first home.

FirstHomeSaver.com.au recently surveyed young Australians with an alarming 74% of respondents saying they believe housing affordability is set to get worse in the next 5 years. Those surveyed attribute the housing affordability crisis predominately to rising interest rates; however also felt that land supply constraints and poor Government policy had contributed to the problem.

What do you believe will happen with housing affordability in the next 5 years?

While 69% of firsthomesaver.com.au survey respondents believed the Government was not doing enough to help first home buyers to tackle the affordability crisis, the introduction of First Home Saver Accounts from 1st October 2008 may change all that.

The Government recently passed the laws introducing First Home Saver Accounts, which feature tax concessions and Government contributions to help struggling first home savers reach the first critical hurdle - saving a big enough deposit to get into the market. Up to the first $5,000 in savings each year will attract a 17% contribution from the Government, and earnings will be taxed at just 15%.

In its Social Trends 2008 Report released today, the ABS highlights the struggle facing first home buyers. The real cost of first homes almost doubled from $165,000 to $310,000 in the ten years to 2005/06. Compounding this are recent interest rate rises that translated to an average interest bill on first homes of $20,100 per year in March 2008, while in 2003 the equivalent figure was just $12,400. At March 2008 first homes buyers needed to borrow an average of $215,000 to reach the first rung on the property ladder.

The Government is hoping this initiative will help address the housing affordability crisis, and early indications look promising with 76% of those polled on the firsthomesaver.com.au website being supportive of First Home Saver Accounts.