Accept loan limits or face higher interest rates sooner, PM hints
Prime Minister John Key seems to be softening up the public for home loan limits.
“House prices have been moving far too fast in Auckland,” the PM said on Breakfast this morning.
“If the Reserve Bank governor doesn’t employ tools other tools like limiting loans, his only option is raising interest rates. He’s probably going to raise interest rates anyway; the question is how fast he raises interest rates.”
The Reserve Bank is considering a loan-to-value limit, which some banks have speculated could be set at 12% of a home’s value.
Over the weekend, the Housing Minister Nick Smith said an LVR limit could be offset by raising the Kiwisaver home loan subsidy.
This morning, Mr Key said raising the subsidy limit would make sense in the Auckland market.
Kiwisaver funds can currently be tapped to buy a home of up to $400,000 but the median price in Auckland is around $640,000, the PM noted.
Mr Key added that while LVR or Kiwisaver tweaks were possible, “The big thing that will get us through is supply.” More homes need to be built.