The Queenstown Lakes Community Housing Trust announced a new
starter loan package last night for first-time buyers of
homes in the Wakatipu Basin.
The loan will consist of a five-year mortgage at a fixed
interest rate of 5.20%. There will be no penalties for early
exits.
Initially the loans would only be made available for lots
1-16 in Nerin Square on Lake Hayes Estate, although more lots
would become available from January.
The trust's chairman David Cole and executive officer Julie
Scott announced the details of the pilot scheme.
Mr Cole said a large problem with New Zealand's affordability
was how people were paying.
New Zealand had created an unsafe buying environment with a
culture of "short-term borrowing" and uncompetitive mortgage
rates. Buyers of homes measured affordability by their
ability to meet mortgage repayments, which made New Zealand
"severely unaffordable" on a global scale.
A homeowner's debt service ratio (DSR) was calculated by
subtracting the household income from their mortgage costs.
New Zealand's average DSR was 10% to 18% higher than the
internationally defined affordability rate. The answer for
Queenstown was mortgage repayments comprising no more than
30% of a household's gross income.
New Zealand's two-year rates were at least 77% higher than in
the UK, Canada, Singapore and the US and "it makes no
financial sense to buy a house", he said.
The starter loan package would lock in affordability beyond
the purchase date of the house.
The loans will be available only for those with permanent
residency, buyers of first homes, those in full-time
employment, earners of low to moderate incomes and those who
have saved a minimum of a 5% deposit.
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