web analytics

Because things aren’t quite tough enough

Written By: - Date published: 9:35 am, May 9th, 2013 - 24 comments
Categories: class war, housing - Tags: , ,

Because things aren’t quite tough enough for first-time home buyers yet:

First home buyers in the firing line

First-home buyers are in the firing line as the Reserve Bank aims its first direct shot at the overvalued housing market.

They can expect to face higher interest rates if they want to borrow more than about 80% of a home’s value, under new moves revealed yesterday. That could push up the interest rate on a floating mortgage from about 5.85% to about 6%.

One banking expert has called the moves a “slap in the face” for first-time buyers. Some property investors and small businesses may also find it harder to get a big loan from a bank.

This “first direct shot” is aimed at exactly the wrong target.

24 comments on “Because things aren’t quite tough enough”

  1. just saying 1

    Some property investors and small businesses may also find it harder to get a big loan from a bank. Not to mention property investors are the group most likely to be borrowing more than 80% of the cost of a house.

    Because:
    a) Most low to middle income earners couldn’t afford the repayments on a mortagage of greater than 80 percent, unless that mortgage was being “paid off” by tenants and tax breaks. and
    b) Banks wont lend to borrowers who can’t demonstrate the ability to pay the mortgage.

    Surprise, surprise, the wealthy playing the ‘won’t someone whink of teh strugglers?’ card in their big-stakes poker games.

    I’m sorry that there will bethose who are genuinely struggling affected.
    But since when has the media given a shit about them?
    This issue is getting oxygen because the children of the comfortably middle class might be less able to afford a first home in one of the most expensive areas, and the (often tight for tax purposes) margins of of rentiers and property developers potentially being squeezed.

    • Draco T Bastard 1.1

      +1

      • Rich 1.1.1

        Most people who don’t already own a house can’t afford to buy one full-stop, even if they could get a 100% mortgage. What’s needed are decent publicly owned houses available on a lifetime tenancy to anyone who wants one.

    • AsleepWhileWalking 1.2

      +1

  2. MrSmith 2

    So what will be the out come of this policy.

    1) First home buyers will be shut out of the market for longer as they save there deposits, plus they will have to work longer and harder to meet the criteria.

    2) These extra saving will be held in banks which will then be allowed to print and lend more money into New Zealand.

    3) These first home buyers will have to live somewhere, they just won’t suddenly disappear, so they will be renters for longer pushing up demand for rental properties.

    4) As demand for rentals increases so will their value, inflating the property bubble.

    5) Who stands to benefit from this move? Anyone that can raise the extra deposit or show extra income, mainly the already rich.

  3. muzza 3

    Wonder what might happen if interest rates were not being artificially controlled….

    • Draco T Bastard 3.1

      Charging interest should be banned outright. That would remove the incentive to accumulate money and thus increase actual spending thus boosting the financial economy.

      Unfortunately, it would also contribute more to the destruction of the environment, boost climate change and use up scarce resources.

  4. vto 4

    A house is no longer only worth what someone is willing to pay for it.

    Today a house is only worth what a bank is willing to lend on it.

    And that, my friends, is the Great Distortion. Was astounded to hear yesterday that over 30% of new mortgages are over 80% lvr. That is massive.

    The ponzi scheme cancer continues to grow. And grow. And grow.

  5. ghostrider888 5

    interest rates were predicted to rise second half of this year some time ago, Hickey et al;

  6. just saying 6

    I just checked.

    It would cost $573.13 per week to service a $400,000 mortgage over 25 years with Kiwibank today (5.8% interest). Compulsary insurances, and rates would easily push that up to $700 pw
    The warehouse was recently applauded when it announced that it will pay long-term employees the princely sum of $720 per week, gross

    The median house price in Auckland is $566,000. ($810 per week before insurance and rates)

    This issue does NOT primarily concern low to low-middle income earners.
    Yet, strangely, that’s how it’s being framed.

    • Draco T Bastard 6.1

      Yep, it’s really only going to affect the high to very high income people.

    • infused 6.2

      There’s generally two people paying the mortgage. There are still many 300k houses out in the hutt valley in Wellington.

  7. AsleepWhileWalking 7

    I’d like to see houses only available after 30% deposit has been saved, but most importantly we need to make it less attractive to be a landlord.

    Home ownership = pride, stability and a greater level of control over your living environment. We also need to encourage sweat equity.

    • Draco T Bastard 7.1

      …but most importantly we need to make it less attractive to be a landlord.

      Oh, that’s easy. Change rates to a percentage of income and make it per residence owned. I suspect that being a landlord will be become unpopular very quickly.

    • Colonial Viper 7.2

      I’d like to see houses only available after 30% deposit has been saved, but most importantly we need to make it less attractive to be a landlord.

      Disagree.

      We need to make it more attractive to be a landlord (as opposed to being a property speculator). Stable solid net returns of 3% to 4% per annum if their accommodation meets tight quality requirements.

      • Draco T Bastard 7.2.1

        No, what we need is for the government to become the landlord and running the rentals at as close to cost as possible.

  8. infused 8

    Why does everyone need to own a house? Genuine question. I bought mine through a family member, because I got it for cheap, however, if I couldn’t have done this, I would never have bought a house. I don’t see a real reason to.

    It’s basically a massive ball and chain around your wallet for the next 25-30 years.

    I rented for along time before I bought my current home. The one good thing is, the landlord has to do all the work, pay the rates, etc.

    • Colonial Viper 8.1

      Good point. The vast majority of people in the world do not have their own house. And having 2 or 3 generations conducting their lives under the same roof totally standard

    • Draco T Bastard 8.2

      It’s basically a massive ball and chain around your wallet for the next 25-30 years.

      And then it’s freehold which a renter will never see, i.e, a renter has that ball and chain permanently.

      • Steve Withers 8.2.1

        Rentals in Auckland are very expensive. My mother can rent a very nice, brand new, two bedroom flat in London, Ontario, Canada (pop: 500,000 – university town) for about $850 / month. That includes all utilities (electricity, heat, water, rubbish disposal) except the phone and cable TV. There is also a swimming pool, gym, and sauna. You do pay extra to park a car in the underground parking garage. But it’s worth it in the winter when it might be -20C.

  9. Steve Withers 9

    I have two flats I rent out. I have just spent about $50,000 renovating one of them (gutted back to framing and starting over..) and it will be on the market in the next 2-3 weeks. I guess I should thank National for pouring petrol on the price of rentals by blocking home ownership for more people.

    Still won’t vote for them, though.

  10. Steve Withers 10

    In Auckland, one of the things that may affect house prices is all the people who have long family association with the city and – collectively – may own several homes across a family group. For example, the baby boomer kids of people who bought homes in the city 60-70 years ago and LONG ago paid off mortgages that would look like lunch money today, may well have inherited a home worth over a million dollars….even though they may well work at the Warehouse. I’ve known a few in the Devonport area….who don’t actually earn much money, but they are sitting in homes worth more than they could reasonably earn in the next 30 years. But they don’t sell because…they have always lived there and don’t want to. I’d like to see some study into this segment of homeowners. They may never be “first home buyers”…so much as “first home inheritors”.

    I tend to think of the economy these days being like being born into a monopoly game that started a long time ago. There are no streets left to buy. Your lot is to get your $200 and pay outrageous rents everywhere you turn. You’re always in debt for just existing……and you can accumulate capital only with good luck and with great difficulty.

Recent Comments

Recent Posts

  • RCEP trade deal risks repeating TPPA mistakes
    The lesson from the demise of the Trans-Pacific Partnership Agreement (TPPA) should have been that it is time to re-think this type of so-called trade agreement. But despite warnings from internationally-recognised experts, there are more secretive “trade” negotiations happening this ...
    GreensBy Barry Coates
    10 hours ago
  • Education for All?
    This year I have been focused on getting a better deal for kids and families with learning needs such as dyslexia, dyspraxia, and autism spectrum. We had a Select Committee inquiry into the issues faced, but the Government was too ...
    GreensBy Catherine Delahunty
    12 hours ago
  • Economy must deliver a fair go for New Zealanders
    The latest Half Yearly Economic and Fiscal Update (HYEFU) provides further evidence that the economy that the National Government and Bill English have is sitting on shifting sands and leaves many people behind, Labour’s Finance spokesperson Grant Robertson says today. ...
    2 days ago
  • A Billion Better Things
    Earlier this week I posed some questions to Finance Minister Bill English about his support for the government’s plan to spend a billion dollars on a new prison. I was pretty disappointed in his answers, all of which flew in the face of his own ...
    GreensBy David Clendon
    2 days ago
  • Govt already in ‘holiday mode’ on $2.3b owed to Kiwi workers
    The Government is dragging its feet while working New Zealanders are still missing up to $2.3 billion collectively owed to them through underpaid holiday pay entitlements, Labour’s Economic Development spokesperson David Clark says. “The cover was blown on this issue ...
    2 days ago
  • Why is New Zealand still the exception on deposit protection?
    I took the opportunity to question the Reserve Bank Governor, Graeme Wheeler, about New Zealand’s lack of deposit protection in front of the Finance and Expenditure Select Committee in Parliament yesterday. Why does the Reserve Bank continue to oppose protecting ...
    GreensBy James Shaw
    2 days ago
  • Statement on proposed United Nations role
    “There has been a high degree of media interest in New Zealand about a possible post with the United Nations. “My name has been proposed to the United Nations Secretary General to be his Special Representative in South Sudan. ...
    2 days ago
  • David Shearer proposed for UN peacekeeping role
    Mt Albert MP David Shearer is being proposed for a demanding and exciting role heading the United Nations peacekeeping force in South Sudan, says Labour Leader Andrew Little. “David has kept me fully informed about this opportunity and we are ...
    2 days ago
  • Karori Kids and Campbell Kindergarten must be saved
    The Minister of Education needs to show some leadership and secure the future of two not-for-profit early childhood education centres that could be faced with closure as the land they sit on is up for sale, Grant Robertson Labour MP ...
    2 days ago
  • Ministry reveals shocking charter school results
    NCEA results for charter schools have been massively overstated with documents revealing many students leaving school without basic NCEA level two qualifications despite this being a main educational target for the Government, says Labour Education spokesperson Chris Hipkins.  “Documents obtained ...
    2 days ago
  • Minister must protect MSD staff
      The Minister of Social Development should immediately implement safer work practices to ensure tragedies such as the Ashburton killings don’t happen again, says Labour’s Social Development spokesperson Carmel Sepuloni.   ...
    2 days ago
  • A vote for the Māori Party is a vote for National
    Comments made by the Māori Party leadership in the wake of John Key’s surprise resignation make one thing clear: a vote for them is a vote for a fourth term National Government, and the increasing inequality and poverty for Māori ...
    3 days ago
  • Collins and English split over police funding
    The bloodletting has already begun with splits and divisions emerging after the Police Minister knifed the Finance Minister via the media, says Labour Police spokesman Stuart Nash. ...
    3 days ago
  • Next Prime Minister must tackle foreign speculators
    The public rightly puts much of the blame for the housing bubble at the feet of foreign speculators, and the next Prime Minister must listen to their concerns, says Labour’s Housing spokesperson Phil Twyford. ...
    3 days ago
  • NZ student performance slips in international study – again
    The continuing fall in Kiwi kids’ performance in the OECD Programme for International Student Assessment (PISA) study shows the damage being inflicted by National’s cuts to education and one-size-fits-all approach, says Labour’s Education spokesperson Chris Hipkins. “For years, National has ...
    3 days ago
  • CYF reforms dangerous backward step
    Child protection has taken a massive step backwards today with the Government passing a Bill that will give significant powers to unspecified ‘professionals’ or contract holders, says Labour’s Acting Children’s spokesperson Carmel Sepuloni. ...
    3 days ago
  • Improve workplaces, and address domestic violence
    Last week the Productivity Commission put out a report about how to grow “weak labour productivity”. These views are being criticised as being straight out of the 1980s. What is a real problem is that we have a problem of ...
    GreensBy Jan Logie
    4 days ago
  • Palm oil industry implicated in human rights abuses
    The Green Party has campaigned for several years for mandatory palm oil labeling to give consumers choice. Most consumers do not want to support a palm oil industry that is destroying tropical rainforests and contributing to dangerous climate change emissions. ...
    GreensBy Mojo Mathers
    4 days ago
  • Syphilis on the rise in NZ
    Cases of syphilis are increasing in Auckland. You read that right, syphilis!  RNZ reported today that rates of syphilis have increased by 71 percent (between 2013-2015). We have known about the increase in syphilis figures for a while, but nothing ...
    GreensBy Julie Anne Genter
    4 days ago
  • We need to work smarter not longer
    The charade of this Government’s sound economic management is unraveling. Misleading GDP figures, pumped up by property speculation and high immigration, have given the impression that all is well, masking our continued productivity decline compared to OECD countries. In fact, ...
    GreensBy Barry Coates
    4 days ago
  • Statement on John Key’s resignation
    Labour Party Leader Andrew Little has acknowledged John Key’s contribution to Government.  “John Key has served New Zealand generously and with dedication. Although we may have had our policy differences over the years, I respect the Prime Minister’s decision to ...
    5 days ago
  • Positive plan secures victory
    The victory of Labour’s newest MP, Michael Wood, in Mt Roskill is the result of a well-organised campaign run with honesty and integrity, says Labour Leader Andrew Little. “I congratulate Michael Wood on his great victory. He will be a ...
    6 days ago
  • Wave of support for Kiwibuild continues to grow
    Apartment builder Ockham Residential has become the latest voice to call for the government to build affordable homes for Kiwi families to buy, says Labour’s housing spokesperson Phil Twyford. “Helen O'Sullivan of Ockham has now joined prominent businesspeople like EMA ...
    1 week ago
  • Cuba Si Yankee No – Fidel Castro and the Revolution
    The death of Fidel Castro is a huge historical moment for the older generation who grew up with the toppling of Batista, the Bay of Pigs debacle, the death of Che Guevara and the US blockade against Cuba. For younger ...
    GreensBy Catherine Delahunty
    1 week ago
  • Government slashes observer coverage, fails snapper fishery
    The Ministry for Primary Industries (MPI) has more than halved the number of fisheries observers in the East Coast North Island snapper trawl fishery (SNA1). This reduction in observer days, combined with major failures in an unproven and controversial video ...
    GreensBy Eugenie Sage
    1 week ago
  • ‘Exemplar’ Māori Land Court under siege
    TheMāori Land Court, hailed as an “exemplar” by the Ministry of Justice chief executive and Secretary, Andrew Bridgman is under siege by the Government through Māori land reforms and a Ministry restructure, says Labour’s Ikaroa-Rāwhiti MP Meka Whaitiri. ...
    1 week ago
  • He Poroporoaki ki a Te Awanuiārangi Black
    Kua hinga he whatukura o Tauranga Moana. Kua hinga rangatira o te iwi Māori. Ka tangi tonu ana te ngākau nā tāna wehe kei tua o te ārai. E rere haere ana ngā mihi aroha o mātou o Te Rōpū ...
    GreensBy Marama Davidson
    1 week ago
  • CYF reforms ignoring whānau based solution
    When approximately 60 per cent of children in state care are Māori processes need to change in favour of whānau, hapū and iwi solutions, said Labour’s Whānau Ora spokesperson Nanaia Mahuta.  “Widespread concern about Government reforms of Child Youth and ...
    1 week ago
  • Hip and knees surgery takes a tumble
    The statistics for hip and knee electives under this Government make depressing reading, says Labour’s Health spokesperson Annette King.  “Under the last Labour Government we achieved a 91 per cent growth in hip and knee elective surgery. Sadly under this ...
    1 week ago
  • Parata’s spin can’t hide cuts to early childhood education
    No amount of spin from Hekia Parata can hide the fact that per-child funding for early childhood education has been steadily decreasing under the National government, Labour’s Education spokesperson Chris Hipkins says. “In the 2009/10 year early childhood services received ...
    1 week ago
  • Nats will jump at chance to vote for KiwiBuild Bill
    National will welcome the chance to vote for a real solution to the housing crisis after their many, many failed attempts, says Labour MP for Te Tai Tokerau Kelvin Davis. Kelvin Davis’s Housing Corporation (Affordable Housing Development) Amendment Bill was ...
    1 week ago
  • Million dollar houses put homeownership out of reach of middle New Zealand
    35% of New Zealanders now live in places where the average house costs over a million dollars, and it’s killing the Kiwi dream of owning your own place, says Labour’s housing spokesperson Phil Twyford. Latest QV stats show that Queenstown ...
    1 week ago
  • Opportunity for political parties to back Kiwi-made and Kiwi jobs
    The First Reading in Parliament today of his Our Work, Our Future Bill is a chance for political parties to ensure the government buys Kiwi-made more often and backs Kiwi jobs, says Leader of the Opposition Andrew Little. The reading ...
    1 week ago
  • Solid Energy must open the drift
    Solid Energy is showing no moral spine and should not have any legal right to block re-entry into the Pike River drift, says Damien O’Connor MP for West Coast-Tasman.  “Todays failed meeting with  representatives from the state owned company is ...
    1 week ago
  • 20,000 at risk students “missing”
    A briefing to the Minister of Education reveals 20,000 at-risk students can’t be found, undermining claims by Hekia Parata that a new funding model would ensure additional funding reached students identified as at-risk, says Labour’s Education spokesperson Chris Hipkins. ...
    1 week ago
  • Crime continues to rise
    Overall crime is up five per cent and the Government just doesn’t seem to care, says Labour’s Police Spokesperson Stuart Nash. ...
    1 week ago
  • Treasury fritters $10 million on failed state house sell off
    The Treasury has wasted $10 million in two years on the National Government's flawed state house sell off programme, including nearly $5.5 million on consultants, says Labour Finance spokesperson Grant Robertson. "New Zealand needs more state housing than ever, with ...
    1 week ago
  • National slow to learn new trade lessons post TPPA
    Yesterday, the Minister for Trade misused economic data in order to try to make the case for more so-called ‘trade agreements’ like the TPPA which are actually deregulatory straitjackets in disguise. In welcoming a Ministry of Foreign Affairs and Trade ...
    GreensBy Barry Coates
    1 week ago
  • Skilled migrant wages plummeting under National
    Wages have plummeted for people with skilled migrant visas working in low-skilled occupations, driving down wages for workers in a number of industries, says Labour’s Immigration Spokesperson Iain Lees-Galloway. “Documents acquired by Labour under the Official Information Act reveal that ...
    1 week ago
  • Child abuse apology needed
    The Government's failure to act on recommendations from Judge Henwood, based on years of work by the Confidential Listening and Assistance Service (CLAS) will further undermine any faith victims may have put into the process, says Labour’s Children’s Spokesperson Jacinda ...
    1 week ago
  • Reserve Bank again highlights National’s housing failure
    National’s failure to deal with the housing crisis in New Zealand is once again being exposed by the Reserve Bank today, in a scathing assessment of the Government’s response, says Labour Finance spokesperson Grant Robertson “Governor Wheeler is clearly worried ...
    1 week ago
  • Palm Oil Labelling: Possible Progress?
    On Friday, the Minister for Food Safety, along with her Australian colleagues finally looked at the issue of mandatory labelling of palm oil. We’ve been calling for mandatory labelling for years and we were hoping that the Ministers would agree ...
    GreensBy Mojo Mathers
    1 week ago
  • National: Fails to achieve
    The ineffectiveness of the National Government’s approach to schooling has been highlighted by the latest Trends in International Maths and Science Study (TIMSS) report released overnight, Labour’s Education spokesperson Chris Hipkins says. ...
    1 week ago
  • Faster into Homes – a new pathway for first home buyers
    This week Parliament will select another members’ bill from the cookie tin (I kid you not, it really is a cookie tin) and I’ve just launched a new bill I’m hoping will get pulled – to help people get into ...
    GreensBy Gareth Hughes
    1 week ago
  • Selling off our state housing stock isn’t working for NZers
    I want to end homelessness and ensure that everyone has a warm, safe, dry home. This National Government has let down New Zealanders, especially the thousands of New Zealanders who are struggling with something so basic and important as housing. ...
    GreensBy Marama Davidson
    1 week ago
  • Government needs to ensure fair deal on EQC assessments
    Kiwis affected by earthquakes might not get a fair deal if the Government pushes ahead with secret plans to let private insurers take over the assessment of claims, says Labour’s Canterbury spokesperson Megan Woods. “Under questioning from Labour the Government ...
    1 week ago
  • Key’s priorities the real ‘load of nonsense’
    The Prime Minister’s fixation with tax cuts, despite a failure to pay down any debt and growing pressure on public services is the real ‘load of nonsense’, says Labour Finance spokesperson Grant Robertson.  “We’re getting mixed messages from National. John ...
    1 week ago
  • Free Speech and Hate Speech
    Last week we were very concerned to hear that an Auckland imam, Dr Anwar Sahib, had been preaching divisive and derogatory messages about Jewish people and women during his sermons. It was a disturbing incident coming at the end of ...
    GreensBy James Shaw
    2 weeks ago
  • Young Kiwis struggling under record mortgage debt
    The Government needs to step in and start building affordable homes for first homebuyers now more than ever, says Leader of the Opposition Andrew Little. ...
    2 weeks ago
  • Tairāwhiti says No Stat Oil!
    Tairāwhiti says yes to a clean environment for our mokopuna today and for generations to come. Tairāwhiti are have a responsibility to uphold their mana motuhake over their land and their peoples and are calling on the Government to honour ...
    GreensBy Marama Davidson
    2 weeks ago