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?”


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines



Labour: Little Announces New Shadow Cabinet

“Labour had an impressive intake of fresh faces after last year’s election and newest MPs have now had a year to show what they’re made of. This reshuffle rewards hard work and continues my drive to renew our Caucus line up." More>>


Because Reasons: Someone Reckons David Seymour Is Politician Of The Year

Trans Tasman's 11th annual Roll Call has thrown a curve ball this year, ignoring the likes of John Key, Bill English, and Winston Peters to pick its politician of the year from the ranks of the new generation. More>>


Whaling: NZ Deeply Disappointed By Japan's Decision

“New Zealand is strongly opposed to whaling in the Southern Ocean. We call on Japan to take heed of the 2014 International Court of Justice decision and international scientific advice concerning their whaling activities.” More>>


Relevant Consents Gained: Government Unveils RMA Reform Package

The government has formally hauled down the flag on its attempts to alter the balance of environmental and economic priorities in the Resource Management Act, unveiling a 180-page Resource Legislation Amendment Bill containing reforms that have been largely endorsed by most political parties. More>>


Closing Schools And Such: Interim Redcliffs Decision Announced

“While the school’s board has argued that circumstances that could give rise to potential disruption are extremely unlikely, advice from technical experts has shown these concerns cannot be ruled out." More>>


Jane Kelsey: High Court Can’t Make Groser Provide TPPA Information Faster

‘This week we went back to court to challenge Trade Minister Groser’s stalling tactics over the release of information on the Trans-Pacific Partnership Agreement negotiations, following a High Court order that he reconsider the Official Information Act request I made last January’, said University of Auckland law professor Jane Kelsey, first applicant in the case. More>>

Werewolf 58: No Climate For Change

The last time the global community tried to take collective action on climate change the world’s leaders finally came to agree that every not-too-onerous effort should be made to hold global warming to 2°C above the pre-industrial average. At Paris, all 150 participant countries nations will have put forward their pledges... On the information available, New Zealand's is the second weakest contribution of any nation in the developed world. More>>


Lambton Quay Shutdown: Object Was Made To Look Like Bomb

Police cordoned off part of Lambton Quay Wednesday afternoon, saying that a suspicious package had been found. Buildings were evacuated and buses were detoured. The army’s explosive ordnance disposal unit was brought to the Quay. More>>


Public Sector Still Shrinking: Record Low Number Of 'Backroom Bureaucrats'

Ongoing restraint in the public sector and a focus on better frontline services has seen a further reduction in the number of core Government employees, State Services Minister Paula Bennett says. More>>


Get More From Scoop



Search Scoop  
Powered by Vodafone
NZ independent news