REIWA welcomes reduction to Keystart’s interest rates

REIWA CEO Cath Hart has welcomed the change to Keystart’s interest rate setting policy, which has reduced its variable interest rate by almost 1 per cent.

Effective from 1 July 2023, Keystart is now basing its rates on the movements of the Reserve Bank of Australia’s (RBA) cash rate plus a fixed margin of 3.5 per cent.

For the average Keystart customer with a $390,000 loan over 30 years, the rate reduction means an annual savings of almost $3,000.

Ms Hart said Keystart provides a valuable service, helping thousands of Western Australians who found it difficult to get a loan with a traditional lender into affordable home ownership.

“As a transitional government lender, Keystart offers loans with deposits as low as 2 per cent and doesn’t charge Lenders Mortgage Insurance, but this means it assumes more risk and its interest rate is higher than most banks,” she said.

“In this climate of steeply rising interest rates, this has made it more difficult for potential home buyers to qualify for a loan and added financial pressure to current Keystart mortgage holders.

“Reviewing the rate-setting policy is a welcome move by the Government, with the change providing immediate cost-of-living relief to more than 14,000 current home owners who have Keystart mortgages, while giving more people the opportunity to buy a home.”

Previously Keystart’s interest rate was based on the movement of the big four banks. The rate would have increased to 8.51 per cent following the RBA’s rate rise in June, instead the interest rate will be 7.6 per cent.

Keystart has helped more than 120,000 Western Australians achieve their home ownership goals since it was established in 1989. And while it does charge a higher interest rate than traditional lenders, it also encourages homeowners to move to other lenders when they build equity in their home.

The change to Keystart’s interest rates follows another recent announcement to expand its Urban Connect Home Loan program to include one-bedroom apartments and introduce funding for off-the-plan apartment developments.