Higher-earning Australians flocking to 5% first home deposit scheme with some borrowers earning over $200,000

The 5% deposit scheme has been touted by Labor as a way to increase home buying, but ABS data indicates there was just a 3% increase in first home buyers from October to March. Photograph: Christopher Hopkins/AAP View image in fullscreen The 5% deposit scheme has been touted by Labor as a way to increase home buying, but ABS data indicates there was just a 3% increase in first home buyers from October to March. Photograph: Christopher Hopkins/AAP Higher-earning Australians flocking to 5% first home deposit scheme with some borrowers earning over $200,000 Exclusive: Economists warn Labor’s removal of caps could be pushing up prices as support flows to people in better financial positions Get our breaking news email , free app or daily news podcast Most Australian first home buyers are using the government’s 5% deposit scheme, with one in three new participants earning more than the scheme’s previous cap for high income earners. The influx of high income earners into the first home guarantee program, economists warn, has pushed up property prices by increasing buying capacity for people who would have bought anyway. The former Coalition government installed a scheme whereby lower-income first-time buyers could borrow 95% of a property’s value and have the government pay for their lenders’ mortgage insurance. Labor scrapped the income caps of $125,000 for single borrowers and $200,000 combined for joint borrowers last year, fulfilling a pre-election pledge. Data from Housing Australia, prepared for Senate estimates and seen by Guardian Australia, shows the scheme backed 15,924 single borrower loans and 23,790 joint loans from 1 October, when the income cap was removed, to 30 April. Sign up for the Breaking News Australia email The 39,704 government-backed loans include 13,979 over the scrapped income caps: 6,812 single borrowers with incomes over $125,000 and 7,167 joint borrowers earning over $200,000. At the upper end, nearly 1,000 single Australians earning $200,000 and above, and 1,251 couples earning a combined $275,000 or more, enjoyed a government-backed 5% deposit. Higher earners are swarming the 5% deposit scheme Amy Auster, chief executive of Policy Institute Australia, said the removal of caps had meant support flowed to people in better financial positions. “It always matters because … government support traditionally goes to the people who need it the most,” Auster said. “There’s been an ongoing expansion of efforts to financially support … first home buyers, and I understand why, but in the end, it hasn’t solved the problem.” skip past newsletter promotion after newsletter promotion Cold feet and cooling prices: Australia’s property market is transforming – and first home buyers aren’t biting Read more Saul Eslake, an independent economist, said the scheme had likely been used by people who would have bought homes anyway while inflating their debt. “The way it was expanded by Albanese goes to the heart of why we have the housing proble