MIL OSI – Source: Green Party –
Headline: RBNZ rate hike equals more pain for home owners
“Inflation is currently well below the 2.0 percent target and this third interest rate hike since March whacks home owners, to say nothing of exporters, who will have to grapple with an ever-rising New Zealand dollar.”
Today’s Reserve Bank interest rate hike means home owners with a mortgage of $250,000 will pay $900 a year extra in interest than they did in March, Green Party Co-leader Russel Norman said.
“Inflation is currently well below the 2.0 percent target and this third interest rate hike since March whacks home owners, to say nothing of exporters, who will have to grapple with an ever-rising New Zealand dollar.
“Home owners and those aspiring to home ownership got no assistance in last month’s Budget and today have been slammed again, plus the bank promises more hikes this year and next despite Governor Graeme Wheeler saying inflation and wage inflation is moderate,” Dr Norman said.
The RBNZ lifted the Official Cash Rate by quarter of percentage point to 3.25 percent. Annual inflation is 1.5 percent and actually was lower in the year to March than it was the previous quarter.
“People on floating rate mortgages will be hit immediately and even those on fixed rates will eventually be punished,” Dr Norman said.
“Governor Wheeler has signalled more rate rises ahead. Most families are already stretched. On a mortgage of $250,000, you will likely by the end of this year have $1000 less a year of disposable income. Many home owners, especially in Auckland, have considerably larger mortgages than that.
The RBNZ is virtually the only central bank around the world hiking interest rates. Some, such as the European Central Bank, are actually cutting rates.
“In the March Monetary Policy Statement, Mr Wheeler said the exchange rate was unsustainably high and he repeated that today. But today’s hike, and with more hikes promised, exporters can expect more pain,” Dr Norman said.
“The Government’s failure to manage the housing sector, where the median house price has risen 33 percent and 44 percent in Auckland on John Key’s watch, is a key driver of today’s RBNZ action.
“Instead of a hands-off approach, the Green Party would more actively manage the housing sector to reduce the attractiveness and profitability of housing speculation.
“The Green Party will take the heat of the housing market by building more state houses and funding third party organisations to provide more affordable houses. We also will curb property speculation through a capital gains tax (except on the family home) and restrict non-resident purchases of property,” Dr Norman said.
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