ME Bank looks for an answer to scrapping of First Home Saver Accounts
First Home Saver Accounts are being phased out, with no new accounts being accepted and contributions to dwindle.
After this time, they will become regular accounts with the institution they were taken out with.
It wasn't a hugely popular product with our Big Four and across all those providing this product, 46,000 total accounts were recorded in December 2013, with $521.5 million held in the accounts collectively.
ME Bank's First Home Saver Account, one of the most popular, saw 24,000 take it up. With an average of $15,000 in these accounts, general manager asset products Luke Easton said that they were not involved in any discussions with the government around the product.
In fact, it appeared that those who had taken out First Home Savers Account with ME Bank had been largely positive about it.
Easton said that he's disappointed that discussions around how to improve these accounts did not occur, before the decision was made to get rid of it entirely.
"We've been happy supporting first home buyers," said Easton, noting the scheme worked well for those involved. "None of the majors picked up on the product, and we've found it a great opportunity."
One of the benefits that ME Bank account holders found with the product was the inability to touch the funds for the four year dutation - in effect, forcing them to keep it saved away from temptation - and the subsequent requirement that it be spent for the initial purpose, to buy a home.
Many of the account holders were said to be influenced by their parents, who had been made aware of them by their accountants. In turn, they had then helped their children to set up the accounts meaning that "by the time they're 23 or so, they are sitting on a nice nest egg," he said.
In fact, he told Property Observer that they've been considering creating a replacement product for these prospective first time buyers.
However, he said that it's early days and they're looking for feedback first before coming up with any finer details.
Currently, the ME Bank website notes that they're investigating the impact of the announced changes on customers and the pending applications.
It notes that applications received prior to 7.30pm on May 13, 2014, will still be honoured, and that the government will make 17% co-contribution on deposits for this financial year.
Due to the changes, they can no longer offer the account.
