Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


Mortgage market failing home buyers

Media release 24 October 2013:
Mortgage market failing home buyers

Speaking at the annual general meeting of Community Housing Aotearoa, David Cole of the Queenstown Lakes Community Housing Trust (QLCHT) made an impassioned argument that the mortgage market is continuing to fail the next generation of prospective home buyers.

After listing a myriad of factors that expose home buyers to unfavourable conditions, Cole made a strong case for Starter Loans or Housing Bonds as an alternative to the current structural problems and obstacles adversely affecting new home buyers.

In 2011 the QLCHT began piloting its own Starter Loan scheme through a wholly-owned subsidiary, Queenstown Housing Bonds Ltd, with funding of $6 million provided by Central Lakes Trust.

Findings of the two-year pilot will be presented to the Central Lakes Trust next month, with all indications being that it has been a resounding success - to the extent that it could be considered as a commercially viable model to be rolled out more widely.

Unlike the preponderance of variable mortgages on the market, the scheme protects first-home buyers by securing them access to affordable mortgage rates that remain locked in for five years, delivering certainty to household budgets and restoring confidence to buyers with no penalties if homeowners wanted to exit early.

At the end of five years home buyers in the scheme should have paid back 10 per cent of the principal on their loan to the Central Lakes Trust and could then convert to a pre-approved market rate mortgage with SBS Bank. The bond and security are underwritten by the Queenstown Lakes District Council, although Cole remained hopeful that the Government could see the merits of such a scheme and support its expansion with a Government guarantee.

“Our next generation deserve a much better deal,” said Cole, who then outlined the way that funding for an expansion could easily be sourced if just 5% was set aside from the pool of $48 billion held across Community Trusts, ACC and NZ Super funds.

“As a back of the envelope scenario that would see $2.4 billion become available. If that was allocated in $330,000 lots that could result in more than 7000 Home Starter Loans”.

Cole said that an expansion of a Starter Loans scheme could influence better outcomes for New Zealanders and made a suggestion that Community Housing Aotearoa could consider taking a leadership role in sponsoring such an expansion, especially in order to “create dividends for other initiatives and as an opportunity to partner with other stakeholders”.

Cole said there is “scope to be challenging the government on (all of) these issues”, adding that the large sums of GST paid on new houses, potentially amounting to as much as $1 billion a year, was another barrier that the Government could address.

Referring to the high risk created for lenders, but not necessarily banks, in the prevailing mortgage environment he made the point that no one would tolerate an equivalent volatility in the realm of tax. “Imagine the outcry if people met to re-set our income tax every six weeks and the income tax rates were ratcheted up?”

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Open Source // Open Society - Full Coverage

Gordon Campbell:
On The Reserve Bank And Auckland Housing

The ‘crisis – what crisis?’ response by the government to the Auckland housing price bubble is no longer acceptable.

So says Reserve Bank governor Grant Spencer – who used unusually frank language in his speech and subsequent interviews yesterday to call for a capital gains tax, and to generally chastise central and local government for their inaction on a threat to the country’s economic health and financial stability.

That threat has been real for some time. The housing price bubble has already created a currency bubble... Undaunted, the government keeps calling this situation a success story. More>>

 

PARLIAMENT TODAY:

Bangladesh: GCSB Dragging NZ Into Human Rights Abuses

The New Zealand government should stop providing intelligence assistance to Bangladeshi security agencies that are known to systematically engage in human rights abuses, said the Green Party today. More>>

ALSO:

Troops Heading To Iraq: Government Must Come Clean On Deployment

New Zealanders deserve more than to hear about their troops’ deployment overseas from Australian media, Opposition Leader Andrew Little says. “News from Australia that Kiwi troops are on their way to Iraq this week is another example of the culture of secrecy and unknown protections around the deployment.” More>>

ALSO:

Image: Strikers And Protestors Join Outside McDonald's

A group of protestors took to McDonald’s Manners St today as a part of the international fast food workers day of action to end zero hour contracts. More>>

ALSO:

Greens: Special Education Funds Not Spent

More than $32 million of funding for children with special needs has not been spent by the Government, despite families of children with special needs complaining for years that they’ve been denied the support they deserve. More>>

ALSO:

John Key: Pre-Budget Speech To Business NZ

So this Government will remain relentlessly focused on improving the competitiveness of our economy... We will continue to give businesses a platform to invest, grow and create jobs in the knowledge they will be backed by a clear and consistent government policy programme. More>>

ALSO:

Multimedia: Andrew Little’s Response To John Key’s Pre-Budget Address

Labour Party leader Andrew Little spoke today on John Key’s pre-budget address this afternoon in Wellington. Little said National has had seven years to achieve a surplus and Kiwis have “fufilled their end of the bargain.” More>>

Surplus Baggage: Key Backs Off ‘Artificial Target’

John Key’s attempt to redefine his cornerstone promise of two election campaigns as an artificial target suggests his other promises are works of fiction, says Labour’s Finance spokesperson Grant Robertson. More>>

ALSO:

Gordon Campbell: On UE Pass Rates And University Dropout Rates

Houston, there is clearly a problem with (a) the plunge in pass rates for University Entrance qualifications, which has been especially steep among Maori students and also a problem with (b) the failure rates for Maori students among those who reach university... Unfortunately the two problems seem related. More>>

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
More RSS  RSS
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news