Why WA Government Sells Off $1.35b

Keystart is owned by the WA Housing Authority and provides loans to disadvantaged buyers who are unable to meet the deposit requirements of mainstream lenders.

The plan to divest up to 40 per cent of the loan book was set out in the May budget as part of the State Government’s asset sales and debt reduction strategy.

Bendigo and Adelaide Bank has today been named the successful bidder.

Managing director Mike Hirst said the bank had taken on 6,000 of Keystart’s 18,000 loans, but only those with a good repayment history.

“The customers in the portfolio we are acquiring have, on average, a track record of meeting their loan repayments for more than five years,” Mr Hirst said.

“We will not be acquiring any loans that are more than one month in arrears.”

Nevertheless, WA Treasurer Mike Nahan said the sale provided a significant boost to state coffers.

“When finalised, this will mark the second transaction in the State Government’s asset sales program and will achieve a reduction in gross debt,” he said.

“This also represents an important step in ensuring a sustainable future for the home loan program by reducing its reliance on Government borrowings.”

Keystart’s total loan book is worth about $4 billion and makes up 18 per cent of the first homebuyer market in Western Australia.

‘No impact on loan holders under deal’

Premier Colin Barnett said the agreement would both reduce state debt and allow Keystart to continue.

“There is a legislative cap on the amount of Keystart finance, I think it’s around about $4 billion to $5 billion, and we’re approaching that now,” Mr Barnett said.

“Unless we share some of that loan book with the banking sector, the Government won’t be able to provide that amount of Keystart finance.

“It frees up the cap, allows loans to continue to take place and therefore allows houses to be built and jobs in housing construction.”

That deal leaves the State Government responsible for less attractive loans that have not been adopted by the bank.

“Obviously newer loans, in a financial sense, carry a higher level risk and the state bears that risk to support home ownership and to support the building industry,” Mr Barnett said.

“As the years tick by [the loans] become safer.

“The level of default on Keystart is very low and it’s a very good system, a very well managed system and it’s unique to Western Australia.”

The Premier moved to ensure existing Keystart customers the deal would have no impact on their loans.

“The Government fully stands behind all the contracts and all the obligations,” he said.

“People who have Keystart loans will see no difference at all