KEY CHANGES
Help for firsthome buyers
NATIONAL is tipped to unveil assistance for first-home buyers as it moves to provide relief from a likely Reserve Bank clampdown on low-deposit lending.
The package will be unveiled by Prime Minister John Key at National’s annual conference in Nelson this weekend, which comes after a week of the Government being forced on to a crisis footing by the Fonterra baby-formula scare.
The plan to help first-home buyers follows unsuccessful efforts by senior ministers, including Mr Key, to persuade the Reserve Bank to exempt firsthome buyers from the plan to limit the number of low-deposit mortgages allowed by banks.
The package is expected to include changes previously floated to KiwiSaver and the Welcome Home Loan scheme, both of which have income restrictions and price caps.
Housing Minister Nick Smith has previously signalled that the price caps – up to $400,000 in Auckland and some other high-priced housing areas – have not kept pace with rising house prices.
Income restrictions – $100,000 or less for one or two buyers, or $140,000 or less for three – could also be extended so more first-home buyers qualify.
But there is speculation the Government could go a step further and boost the size of its KiwiSaver first-home buyers’ subsidy. That would have the effect of getting first-home buyers closer to the 20 per cent deposit likely to be required once the Reserve Bank introduces its new loan-to-value ratios.
The subsidy is $1000 a year for up to five years but one option understood to have been under consideration is extending that by one or two years.
Mr Key refused to confirm a housing package would be announced, but confirmed it was ‘‘more likely than not’’ the Reserve Bank would implement loan-tovalue rations. ‘‘The challenge here really is that if we don’t allow him [Reserve Bank governor Graeme Wheeler] to try other tools, then his only option is to raise interest rates and that has a big implication for every business and every existing home owner.’’
But he acknowledged the matter was fraught politically.
‘‘Almost all parents want their children to do better and one of the things that makes them proudest is when they graduate from university, or they’re in training, or they buy a home,’’ Mr Key said.
Spirits will be high at the conference, with polls showing that National is about as popular now as it was at the previous election.
But senior ministers could cop flak from the rank and file over a proposal to reduce fishing quotas.
The Government looks set to perform a U-turn on a proposal to cut the snapper limit for recreational fishermen from nine to three.
Primary Industries Minister Nathan Guy said yesterday ‘‘the three option is very unlikely to proceed’’.