Interest rate rises will hit homeowners and businesses

Kiwi homeowners and businesses are set to bear the brunt of National’s failure to get a grip on the housing market with interest rate rises to create an effective pay cut of $880 a month for many Aucklanders, say Labour’s Finance spokesperson David Parker and Housing spokesperson Phil Twyford.

“Skyrocketing house prices in Auckland have seen many families borrow significant amounts and a mortgage of $500,000 is not uncommon,” says Phil Twyford.

“The Reserve Bank yesterday forecast a 2 per cent rise in interest rates over two years. On an average house price of $685,000 with a 10 per cent deposit that means an increase of $880 a month.

“The interest rate rises will be partly down to National’s inability to handle the housing market with prices skyrocketing. When Kiwis are feeling the pinch they will know where to point the finger.

“National should stop wasting time trying to spin New Zealanders and focus its energy on sorting out the housing market,” says Phil Twyford.

“National has tried to claim that low interest rates are the symbol of good economic management. Now they claim that rising interest rates are because of good economic management. Their attempt to have it both ways is laughable,” says David Parker.

“New Zealand businesses already face higher interest rates than their competitors. This will again pump up the exchange rate and the cycle is now set to get even worse.

“No wonder we have such underinvestment in our export sector and continue to have one of the worst current account deficits in the world. The long term hollowing out of our economy will continue,” says David Parker.

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