Bill English’s proposal to allow use of loan to valuation ratios is yet another reason to add to the supply of affordable homes, say Labour’s Finance spokesperson David Parker and Housing spokesperson Phil Twyford.
Phil Twyford says: “Bill English doesn’t understand the housing problem. There simply aren’t enough modest affordable homes.
“The new Reserve Bank rules could require home buyers to put up a bigger deposit. Depending on the design, that could create another hurdle to leap over. Loan to value ratios must be part of a broader attack on excessive housing prices, including addressing a shortage of supply and high material costs.
“The housing affordability crisis needs a multi-pronged approach to reduce the cost of new homes. Labour’s KiwiBuild policy, which will deliver 100,000 affordable homes over 10 years, is a comprehensive sustainable solution that would help make loan to value ratios more effective,” Phil Twyford said.
David Parker says: “The new tools are a necessary addition to the Reserve Bank’s toolkit but they require finesse and subtlety in their design. Otherwise they risk doing more harm than good.
“Limits on loan to value ratios for home lending are used to dampen the housing market in places like Canada. One option used overseas is to exempt first home buyers from the rules, or allow them to put up a smaller deposit.
“Bill English is only doing half the job, unless he broadens the objectives of the Reserve Bank. He risks making it harder for first home buyers without the benefits of creating better jobs and higher wages that full reform of the Reserve Bank Act will help bring,” says David Parker.
28 February 2013 Media Statement