- Changes to Keystart’s interest rate policy provides relief for many WA families
- Keystart customers to receive a reduction in interest rates of almost one per cent providing savings of almost $3,000 per year for the average loan
- Rate reduction to benefit more than 14,000 Western Australian homeowners, along with future homeowners
- New interest rate effective from 1 July 2023
Major changes have been announced to reform Keystart’s interest rate setting policy, which will provide interest cost savings supporting thousands of Western Australian homeowners from 1 July this year.
Following an extensive review, the new policy has been designed to better service customers while still responsibly managing Keystart’s risks as a low deposit home loan provider.
Keystart will now set its rates based on the movements of the Reserve Bank of Australia’s (RBA’s) official cash rate plus a fixed margin of 350 basis points. This means there will be a reduction in Keystart’s variable interest rates of almost one per cent.
Under Keystart’s previous policy, its interest rate would have increased to 8.51 per cent following the RBA’s rate rise in June.Instead, the interest rate payable will be 7.60 per cent.
For the average Keystart customer with a $390,000 30-year loan, the rate reduction means an annual savings of almost $3,000.
As a transitional lender, Keystart exists to enable more Western Australians to get into the housing market and provides options to flexibly transition out of Keystart or make other arrangements.
Keystart is unique in the home loan market, with deposits as low as two per cent and no lender’s mortgage insurance, potentially saving homeowners tens of thousands of dollars.
Previously, Keystart has calculated its rates using the average of the standard variable interest rate of the four major lenders, ANZ, CBA, NAB and Westpac.
As stated by Premier Roger Cook:
“Western Australia remains the second most affordable State or Territory to purchase a home in, and changes to Keystart’s interest rate setting policy ensures Keystart’s rate is no longer linked to the decisions of the big four banks.
“The changes to Keystart’s interest rate policy will assist more Western Australians into affordable home ownership.
“Under the changes, existing customers will also benefit from a reduction in interest rates, providing cost-of-living relief for many Western Australian families.”
As stated by Housing Minister John Carey:
“As Housing Minister, I’m deeply aware of the current housing market across the country and its impacts on many Western Australians.
“The new interest rate policy for Keystart follows an extensive review and has been designed to better serve customer’s interests, while still responsibly managing Keystart’s risk for its low deposit home loans.
“Our Government is using every lever we can to bolster the supply of housing throughout Western Australia including apartment developments through our significant planning reforms, 100 per cent stamp duty concessions and a range of changes to Keystart loans.
“Keystart has supported more than 120,000 Western Australians to achieve their home ownership goals since it was established in 1989.”
