Transit-supportive home loans: a solution to the housing affordability and petrol crisis in Australia

When families rely on public transport rather than automobiles for travel needs, they spend less of their disposable income on transport. The need to travel long distances outside their own communities is reduced when they shop, work, recreate, socialise and learn in an accessible local context. In light of the decrease in housing affordability and the anticipated increasing costs of fuel, the simple concepts underlying the application of Transit-Supportive Home Loan instruments such as the Location Efficient Mortgage (R) (LEM) could well be an initiative which could allow entry into the housing market by those who otherwise would not be able to afford to purchase a home and would also reduce reliance on the motor vehicle and reliance on non-renewable fuels. LEMs are seen in the United States as a way to encourage public transport use and compact development, increase home ownership opportunities for low- and moderate-income families, support local neighbourhood businesses and discourage excessive auto-use and urban fringe development. A number of financial institutions in the US are also supportive of LEMs because they are consistent with community lending criteria and expose a broader range of income levels to the housing market. This paper provides an outline of the existing transit-supportive home loan arrangements available in the US and investigates success of implementation. Finally, it assesses the potential application of these lending mechanisms in Australia and their potential impacts on accessibility, urban form, housing affordability and the use of the private motor vehicle with a focus on policy initiatives which would be required to implement them.