Poor rural families desperate for proper housing have been badly let down by the rising interest rate in the Government's Low Deposit Rural Lending Programme, says Labour housing spokesperson Graham Kelly.

Reports that the Housing Corporation has lifted the rate from 7.5% to 8.2% show this Government's promises have a very short shelf life, Mr Kelly says.

"Last October Murray McCully and Tau Henare said people getting loans through the programme would be offered a seven-year fixed rate of no more than 7.95%. The people who need these loans have been counting on that and now they hear they have to find more money. That's a cruel blow. It's money they don't have."

"For rural families on low incomes or benefits the higher rate just puts a decent home further out of reach. The number being housed by this Government is pitiful and this will only lower it more. Fewer people will seek loans and fewer houses will be built."

"An estimated 7000 families in rural parts of Northland and the East Cape are in seriously substandard housing, without running water, sewerage or electricity. They're living in shacks and under tarpaulins. National would leave them there."

"Labour is committed to extending the Low Deposit Rural Lending Programme. We aim to widen its availability and ensure more families going through the programme are able to buy a house."

"We also have an innovative plan to establish special housing action zones in areas of serious housing need, where land is predominantly multiply owned. Housing New Zealand will have to develop specific plans to increase the housing supply, in joint ventures with Mäori organisations and other social service providers where possible."

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