The Coalition low-deposit first home buyer policy announcement heralds a critical juncture in the Federal Election Campaign as we head in to the final week prior to this Saturday’s poll, with housing affordability rising to the top of voters’ attention.

Whilst the level of first home buyers has risen back above long-term average levels over the past 24 months, the value of the deposit and Lenders Mortgage Insurance required still prices first home buyers out of the market, but this announcement and the bi-partisan response changes all that.

The First Home Loan Deposit Scheme requires a 5 per cent deposit rather than the 20 per cent traditionally required and takes away the cost of having to pay Lenders Mortgage Insurance.

What is certain is that housing policy activates or pacifies investment into the market and this policy will act in the way that Rudd Government policies sent the first home buyer rate rocketing to over 31 per cent of all housing loans in May 2009.

First home lending sits at around 17.7 per cent today which sits above the overall average rate since the ABS started collecting this data, and will see more new homes built and enable more Australians get the keys to the door faster than otherwise would be the case.

The First Home Loan Deposit Scheme will offer support with up to $500 million in the form of equity through the National Housing Finance and Investment Corporation and focuses on improving housing affordability, a role which NHFIC has already started to get runs on the board.

Whilst the Scheme will also help first home buyers save around $10,000 by not having to pay Lenders Mortgage Insurance, it may just substitute for a First Home Owners Grant where this no longer exists or where it may be phased out.

With the ALP pledging to match this policy there is an indication as we hear the last of this cycle’s political advertising that housing is a key issue for Australians and will influence voters’ decisions this Saturday.