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.

Action

RENAME, REWRITE, and REJECT the Regulatory Standards Bill

Submit your suggested changes to the Regulatory Standards Bill! Tell us how you'd change the bill and we could take it to the House!

Action

Anniversary of the Cannabis Legalisation and Control Bill Referendum

If we were to legally regulate cannabis in Aotearoa, what kind of rules would you want to see around access, possession, use, regulations on sale, ...

Action

Save our Polytechs: Campaign Packs

Want to see more supports for our Polytechs? Use these resources to support the campaign!

Action

Save Our Polytechs Petition

Sign our petition today and join us in calling on the Minister for Vocational Education, Hon Penny Simmonds, to Save our Polytechs!

Action

Protect our tamariki - Sign the open letter

Every child in Aotearoa deserves to grow up with safety and stability, wrapped in aroha. Sign our open letter today and help make that a reality!

Action

Stop Growing Homelessness

Sign our petition asking Luxon and Bishop to take action to stop homelessness increasing in Aotearoa.

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

Greens respond to Labour’s CGT announcement

“Labour’s watered down Capital Gains Tax announcement today falls far short of meeting the needs of New Zealanders,” says the Green Party Co-Leader...

OCR cut welcome for some while Govt leaves many behind

Poverty and homelessness continue to grow because of this Government’s decisions, despite the Reserve Bank’s move to lower the Official Cash Rate (...

Greens show Willis’ fiscal straight-jacket is junk, validate case for strong public investment

The Green Party has released its fiscal strategy, demonstrating how we can and must invest in the real-world needs of our country, planet and people.

Rich get much richer, driving inequality and poverty

The 2025 NBR Rich List makes immediately obvious the need for a fair tax system, says the Green Party.

Greens find over half-a-billion dollar hole in Govt Budget

The Green Party has found that the Government has not accounted for its own increased costs as an employer incurred by the KiwiSaver changes rushed...

Greens mark May Day with Green Jobs Guarantee

The Green Party has marked May Day with a pre-budget announcement in Tokoroa, detailing the party’s plan for a Green Jobs Guarantee. READ THE FU...

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...