Reserve Bank reveals threat to first home buyers from rising interest rates

Thousands of heavily-mortgaged first home buyers in Auckland could be hit hard by rising interest rates, thanks to out of control house prices, according to documents released to the Green Party under the Official Information Act.

An email from Reserve Bank analysts to senior Beehive staff in January 2017, titled “response to PM’s questions”, highlights a “significant likelihood of financial distress” for people who have recently got mortgages in Auckland, in the event interest rates rise as predicted.

“The Prime Minister is clearly worried and the Reserve Bank is clearly worried. This is what happens when the Government allows the housing market to spiral out of control,” Green Party Co-leader Metiria Turei said.

“People took on huge risks because they felt they had to buy now, because houses were only going to get more expensive under National. Now that interest rates are rising things are going to be tough for many families with mortgages.

“The Reserve Bank is saying families could be forced to ‘materially reduce consumption spending from normal levels’, which means cutting down on basics like food and paying the bills, or even sell their homes.

“Whether someone earns the minimum wage or a six figure salary, the housing crisis is now affecting people from all walks of life up and down the country.

“The Reserve Bank told the Government that an Auckland family earning $100,000 a year is potentially going to have to spend 60 to 70 percent of their income servicing the mortgage on their first home in the next year or two.

“If people have to spend 60 to 70 percent of their income servicing their mortgage, where is that money coming from? Turning the heater off this winter? Fewer school trips?

“The solution to the housing crisis is for the Government to build thousands of affordable homes, put in place a rent-to-buy programme, crack down on speculators with a capital gains tax (excluding the family home), and restrict overseas investors,” Mrs Turei said.

Volunteer

The Greens are proud to be driven by passionate people like you. Today we need your help to take action on the biggest issues facing Aotearoa. Volu...

Action

Save Auckland's Climate Budget

Sign the petition to stop Mayor Wayne Brown's proposal for dangerous cuts to climate and environmental programmes that protect us from extreme weat...

Action

No New Mines 2023

Action

Expand Voting

Now more than ever, young people in Aotearoa are impacted by Government decisions, and they deserve to have a say. We are calling on all Members of...

Action

End Intensive Winter Grazing

Sign the petition to Labour Ministers, to move faster in bringing regulations into force and end intensive winter grazing.

Action

Trains for Climate

Add your name to our open letter urging the Minister for Finance Grant Robertson to save our passenger trains between Wellington, the Wairarapa and...

Action

Healthy Oceans 2022

Join our Healthy Oceans Crew to help us keep the health and protection of our oceans high on the Labour Government’s political agenda.

Action

It's time: A Ministry for Rainbow Communities

Join our call asking the Prime Minister to establish a Ministry for Rainbow Communities that can champion Rainbow issues.

Action

No new mines on conservation land

Sign the open letter asking Labour Ministers to stick to their promise of banning new mining projects on conservation land.

Action

Allow community ownership of our buses

Public transport is an essential service and helps to tackle the climate crisis by reducing our carbon emissions. But there are barriers to communi...

Action

Local Events

We have activists across Aotearoa / New Zealand who are working hard to build a brighter future for our kids and grandkids. This page lists upcomin...

Latest Finance Announcements

Story

State of books makes clear case for wealth tax

The case for a wealth tax has never been stronger.

Crumbs from the property speculator’s table

High-income property speculators will be the biggest winners from a National Party tax plan that will send house prices and rents through the roof,...

Labour needs to reconsider wealth tax

The announcement today that the Government has decided to cut funding to public services shows exactly why they need to tax wealth and big corporat...

Change the tax system to support struggling households

While inflation is no longer increasing, the current rate will still bring little comfort to families struggling to make ends meet, says the Green ...

Fair tax changes never more urgent

Labour is sending a clear message to New Zealanders that the Green Party is the only way we will get progressive change.

Market study welcome, but Govt can act now

The Green Party is today welcoming the announcement of a market study into banks, but is urging the Government to act now and raise corporate taxes.

Story

Let’s build better, warmer, and climate-friendly

The Government must take steps to ensure that the way we build our homes is helping to meet New Zealand’s climate change targets, the Green Party s...

Sustainable buildings and warm dry homes

Everyone has the right to a warm, dry home. Instead, housing in Aotearoa often makes us sick from damp and cold. In Aotearoa, much of our housing s...

National would rather save landlords some cash than look after sick kids: Green Party

The National Party is more concerned about the back pocket of property investors than sick kids and the elderly, Green Party Co-leader Marama David...

Stop charging homeless people for emergency housing

The Green Party is calling for the Government to stop sending homeless people into thousands of dollars of debt with the Ministry of Social Develop...

Green Party: Building code out of date and won’t ensure warm, dry homes

In response to calls for a compulsory energy rating for buildings the Green Party is renewing calls for the building code to take better account of...

Green Party calling for bold steps to tackle issues in Salvation Army report

The Green Party agrees with the Salvation Army that bold new steps are needed to stop a worrying trajectory of increased rent rises and homelessnes...