Plug pulled on subsidised first home loan scheme

The Northern Territory Government says its decision to raise interest rates for nearly 300 North Credit home loan clients aims to make the housing market fairer.

The Housing Department has advised people who have the subsidised loans that their interest rates will increase from 4.9 per cent to 6.6 per cent from January next year.

Housing Minister Peter Chandler says 57 of the people who have the loans are renting their properties out to others.

"The loans were set up to help low and middle income people get into their homes," he said.

"Today, people are using them as rental properties.

"I think it's the right thing to do to provide a little bit of a driving mechanism to revisit their current financial packages.

"The reality is, like any government scheme, there has got to be a time when government reviews the market and backs out," he said.

"In this case ...

for many people it may be better for them to actually get into the open market rather then the government scheme that they are in at the moment." The changes apply to 293 people who had North Credit loans approved between 2004 and 2009.

The credit contracts are currently based on the Reserve Bank of Australia cash rate but from next year the rates will change to the Commonwealth Bank of Australia standard variable rate.

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