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More bank loan interference on its way?

By Paul Lochore FREINZ

December 2016

More bank loan interference on its way?

What was the Reserve Bank thinking when it asked the Government for the authority to restrict lending to home buyers whose income is considered insufficient to service their home loan? Most banks apply their own lending criteria. So why not leave it to them to make the decisions? The market and the banks will find their own level.

It’s telling that Finance Minister Bill English isn’t rushing to commit himself to this daft idea. And why would the Government consider it when we’re coming up to an election year?

I don’t think bureaucrats in the Reserve Bank should be making such decisions. Or does the Governor of the Reserve Bank know something we don’t?

Is this desire to meddle in minimum deposits for first-time investors and its proposal to further restrict loans to those on low incomes just a way of preparing the banks for a soft landing if the world economy tanks again over the next one to two years?

Why would you want to constrain people who most need a leg up? The Governor of the Reserve Bank is simply putting a noose around their necks. He’s trying to play god and manipulate the property market. Is this really his job? Penalising first-home buyers is not the answer. He’s using them as fodder.

The 40 per cent deposit requirement set by the Reserve Bank has been a joke. That’s because it primarily impacts on first-time property investors. It hasn’t made one jot of difference to seasoned investors with existing property portfolios. So just who are these first-time investors who apparently need to be knee-capped?

They’re ordinary people in their 40s and 50s trying to responsibly secure their retirement income by investing in property. Is this such a crime that it needs to be stopped? This Reserve Bank interference has simply served to hinder the progress of these first-time investors, to prevent them from succeeding.

The pension isn’t enough to live on, certainly in Auckland. What are retirees meant to live on? The only way people can make money is by owning properties that increase in value.

Why would anyone deposit their savings in the bank, when they’ll get only peanuts in interest?

New Zealand has a stagnating economy. We have deflation. Next phase – recession? Most of the Reserve Bank decisions have been disastrous for New Zealanders. Every time the Governor opens his mouth about property lending he affects the real estate market.

Banks are turning down more housing loan applications than ever before. Let banks govern themselves. We do not need the Reserve Bank running the banks, thank you very much.

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