The mortgage market is ''continuing to fail the next
generation of new home buyers'' according to the Queenstown
Lakes Community Housing Trust chairman David Cole, who says
''starter loans'' or housing bonds need to be considered at a
Speaking at the Community Housing Aotearoa annual meeting in
Wellington on Wednesday, Mr Cole, of Queenstown, used the
trust's initiative in the resort as an example of alternative
options which would overcome the present ''structural
problems and obstacles'' hitting home-buyers.
Findings of the housing trust's two-year starter loan pilot
scheme - described as a ''resounding success'' - will be
presented to the Central Lakes Trust next month.
The housing trust began the scheme in 2011 through a
wholly-owned subsidiary, Queenstown Housing Bonds Ltd, with
$6 million provided by the Central Lakes Trust.
Mr Cole said unlike the ''preponderance of variable
mortgages'', the scheme protected buyers by securing them
access to affordable mortgage rates which remained locked in
for five years.
That delivered certainty to household budgets and restored
confidence to buyers, with no penalties if homeowners wanted
to exit early.
At the end of five years, homeowners in the scheme should
have paid back 10% of the principal on their loan to the
Central Lakes Trust and could then convert to a pre-approved
market rate mortgage with SBS Bank.
The bond and security were underwritten by the Queenstown
Lakes District Council - although Mr Cole said he remained
''hopeful'' the Government could see the merits of such a
scheme and support its expansion with a Government guarantee.
Funding for a national expansion of the scheme could be
sourced if 5% was set aside from a pool of $48 billion held
across community trusts, ACC and New Zealand Super funds.
''As a back-of-the-envelope scenario, that would see $2.4
billion become available.
''If that was allocated in $330,000 lots, that could result
in more than 7000 Home Starter Loans.''
An expansion of the starter loans scheme could influence
better outcomes for New Zealanders and suggested CHA could
consider sponsoring that expansion, particularly to ''create
dividends for other initiatives and as an opportunity to
partner with other stakeholders''.
''[There is] scope to be challenging the Government on [all
of] these issues,'' he said.
''Our next generation deserve a much better deal.''