Should Mortgage Holidays Be Extended?
New Zealand real estate is facing a triple whammy in September which will be detrimental to house prices and industry activity unless the Government steps in, argues Century 21 New Zealand Owner Derryn Mayne
The real estate leader says with the general election and the end of the extended wage subsidy scheme both firmly locked in for September, extending the mortgage holiday scheme is a no-brainer.
On 24 March the Government, Reserve Bank and retail banks announced a six-month principal and interest payment holiday for mortgage holders and SME customers whose incomes had been affected by the economic disruption from Covid-19. As of 30 June, nearly 60,000 Kiwis had deferred their payments on the likes of mortgages, while a further 79,000 had reduced their payments servicing home loans, personal lending or debt.
Finance Minister Grant Robertson has said extending the six-month home loan deferral scheme is now being actively considered by the Reserve Bank. Earlier this month, Australian banks agreed to extend their six-month mortgage holiday scheme by another four months.
“Having supported over 1.7 million jobs, the hugely successful wage subsidy scheme comes to an end on 1 September. We have a general election on 19 September which always sees real estate activity slow, then on 24 September the mortgage holiday scheme is due to expire. This could be a spring of discontent for thousands of Kiwis, but it doesn’t have to be,” says Ms Mayne.
The Century 21 boss says the underlying strength of New Zealand real estate continues to prove itself, with any doom and gloom forecast back in March and April yet to be proven right.
“Industry statistics show median house prices across New Zealand are well up on last year and most regions are still experiencing price lifts month to month. REINZ also reported the highest number of new listings and properties sold for the month of June in four years.
“Real estate is defying any negativity and that’s great for overall business and consumer confidence. A perfect storm is now on the horizon, but we still have time to avoid it. The Government, Reserve Bank and retail banks acted decisively back in March. We need that same bold leadership again, and soon,” says Derryn Mayne.
Owner of Century 21 New Zealand