David Cunliffe
Labour Leader

30 January 2014

Govt lack of housing plan will hit homeowners

National’s inept response to skyrocketing house prices and rising rents will heap more pain on homeowners, renters and first home buyers with interest rates set to rise soon, says Labour Leader David Cunliffe.

“Life is about to get harder for homeowners, with many already struggling to meet mortgage payments. The Reserve Bank Governor has indicated interest rates will rise soon, making it much more difficult for homeowners to make ends meet.

“If mortgage rates were ultimately to rise to 8 per cent – as has been suggested by some economists -- for someone currently on a 5.75 per cent rate, this would add $136 a week to a $500 a week mortgage.

“Interest rate rises will also cause an increase in rents, adding to the cost of living burden for many low-to-middle income families who can’t afford a house, are working harder than ever, and are struggling to make ends meet.

“First home buyers will be hit especially hard by rising mortgage costs, which come on top of the introduction of Loan to Value Ratios last year. The Government and Reserve Bank must now admit they got LVRs wrong. It’s time to exempt first home buyers.

“National has repeatedly claimed credit for low interest rates. They now have to take responsibility for looming rate hikes.

“Interest rate rises will also push up the already high exchange rate, creating obstacles for our exporters, dampening business expansion and slowing job creation.

“Rising interest rates will put further pressure on hard-pressed Kiwis and will only widen the inequality gap,” says David Cunliffe.

ENDS

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