About 500 Otago home buyers could be affected by the Reserve
Bank's new mortgage lending limits, Labour leader David
The restrictions on banks lending to people who need to
borrow more than 80% of a home's value come into affect
Mr Cunliffe contacted the Otago Daily Times yesterday
to say the restrictions would make life difficult for home
owners in Otago, although the new policy was targeted at
fixing housing inflation in Auckland.
''It's not Otago's problem, yet the Reserve Bank has gone
with a one-size-fits-all policy taking no account of
It was estimated 13,000 home buyers across New Zealand would
be affected by the changes.
Otago's house prices rose by 3.9% last year, whereas
Auckland's rose 12%, he said.
The lending limits were National's failed attempt to solve
the Auckland housing problem and it was clear it did not
consider their impact on the regions.
Prime Minister John Key has hit back at Labour over the
lending limits, saying home buyers are better off under
National because of lower interest rates and no capital gains
He also said it would be wrong for the Government to
interfere with the Reserve Bank.
Labour's KiwiBuild policy - building 10,000 modern,
affordable homes annually for a decade, a capital gains tax
limiting the profits on property speculation, and smarter
engagement between the Finance Minister and the Reserve Bank
- were other possible solutions to Auckland's housing crisis,
Mr Cunliffe said.
Mortgage Link Otago co-owner Glenda French said while house
prices were lower in Otago, saving 20% of an average house
price of about $345,000 was still a lot of money ($69,000).
''This has made us realise how much work we do in the under
Most banks had advised brokers not to send them pre-approval
applications for anyone wanting 80% or more finance.
However, banks were still allowed to lend to those needing
80% or more, just in smaller numbers than they had in the
past, she said.
People should still meet a mortgage adviser as each person's
case was individual and matters like good savings and
purchase histories were even more important now.
There were also KiwiSaver grants and Welcome Home Loans, with
changes to the loans thresholds coming in today also.
Applicants now only needed a 10% deposit to qualify and in
Otago the house price cap was $300,000 and in Queenstown
Lakes District $425,000.
Income caps were now $80,000 (before tax) for one borrower
and $120,000 (before tax) for two or more borrowers.
''These fall outside the LVR restrictions, so there is still
scope out there,'' Ms French said.