The Home Guarantee Scheme should not be needed

The Home Guarantee Scheme sees the government assist first home buyers by covering the cost of lenders mortgage insurance (LMI) but in my view, LMI is a product that shouldn't exist.

Earlier this week it was announced that the federal government was going to bring forward the Home Guarantee Scheme to commence in October 1 2025. The Home Guarantee scheme allows eligible first home buyers to purchase a home if they have a deposit of 5% without lenders mortgage insurance (LMI), the government will effectively cover that cost for them.

This scheme is controversial in that it is expected that it will increase demand and push housing prices higher. At the same it is also controversial because the government is now providing LMI for these individuals, potentially putting taxpayer funds at risk in doing so.

In my opinion the government should not have to provide LMI to first home buyers simply because LMI is a product which should not exist. Below is a quick explainer about LMI.