Green Party want inflation to be high so that mortgages will cost more

The Green party wants people with mortgages to keep on paying higher interest rates.

Another interest rate cut will pour fuel on the housing price fire, the Greens say.

There’s speculation the Reserve Bank will again cut the official cash rate after a report released today showed inflation rose just 0.2 percent in the first quarter of this year.

In March the bank cut the OCR to a record low 2.25 percent.

Its next review is on April 28.

The Greens say the consumer price index hides the way the housing crisis is hitting peoples’ pockets.

And they want the hurt to continue by keeping interest rates higher than they need to be.

“Lower oil prices mean the CPI is hiding the fact the cost of housing, especially rental housing in Auckland, is rising much faster than wages and other prices,” said finance spokeswoman Julie Anne Genter.

“Low inflation makes it more likely the Reserve Bank will cut the OCR again soon, which could just pour more fuel on the housing crisis fire.”

Ask homeowners whether they want to pay higher interest rates.

But Finance Minister Bill English says that overall, people are reaping benefits.

“Low inflation is helping households get ahead, with wages on average continuing to rise faster than the cost of living,” he said.

“We are in the unusual situation of having solid economic growth, more jobs and rising wages at the same time as very low interest rates and inflation.”

Good luck campaigning in next years election for higher interest rates.

– Newshub

 


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  • jaundiced

    Sometimes it must be a real challenge for opposition parties to find the negative angle to economic indicators like low inflation.
    Yes, low interest rates make it easier to borrow money. That includes the ability to buy a house.
    However, the main reason house prices are high is about supply and demand. Demand is about affordability, but we know that for many, even with low interest rates, affordability is too high. Therefore the demand is from population growth outstripping supply. This also puts pressure on rental costs. The single biggest thing the government should be doing is population planning. They have the ability to manage the flow of immigration to so that it matches the supply of housing, as well as the development of infrastructure, education, health services etc.
    For some reason they are choosing not to do that.

  • kayaker

    It seems JA Genter is one of the few pollies left in the country that the media could go to. As usual, she’s only too keen to talk. No substance though.

  • oldmanNZ

    let me try to understand the greens.
    they want high interest, to stop the house prices going up, to make it more affordable…yet if high interest, that just make it more unaffordable?
    and they say the rent is too high?, well increase interest…increase rent.?

    the greens are illogical again. They want to control the banks now.

    • Skydog

      I’m a landlord and I have a very good tenant. I have not increased the rent in 8 years due to interest rates reducing and wanting to keep my tenant. As soon as the rates increase, so will the rent. I have no choice if I wish to keep the house.

      I’m not going to lose out if rates rise, but my tenants who can’t afford a house in the first place will have to pay the price.

    • Rick H

      Don’t forget, old man, it was the GREENs Policy to finance the increases with the use of a money printing press.
      Rates go up – they print and distribute the balance to the poor; and also print a shed load for themselves to solve the world’s problems with.

  • cows4me

    The Green Party is high.

  • Rebecca

    Perhaps the Greens might consider the ease with which those who know how can borrow at ridiculously low rates in (say) China and purchase Kiwi houses for higher prices than locals can afford because they earn less and pay more interest. Lowering local interest rates towards rates enjoyed abroad translates to less advantage for everybody else over Kiwis. Where’s the victim again?

    • Ross

      In saying that, if the RBNZ cut rates then the currency depreciates. Those offshore borrowers then have to wear that unless they’ve hedged up their currency risk. So whilst it might seem attractive to those who can finance their house using offshore debt, currency depreciation hits them the hardest.

      • Rebecca

        So reducing the rate makes NZ homes riskier/less attractive to outsiders? While making them more affordable for locals- and might even lead to price deflation if buyers who have no intention of living in the house, start looking elsewhere?

        Oh, the horror.

        • Ross

          Sadly the other way around… reducing the rate makes those already invested carry a currency loss, however those who haven’t bought yet buy Kiwi dollars for cheaper so seems more affordable to them too!

          • Rebecca

            Surely a depreciation risk makes it riskier for those relying on borrowings in foreign currency, to purchase a house at the auction today? Whereas for kiwis it increases mortgage affordability and therefore spending power? Especially if the droves of foreign-language-speaking bidders at so many auctions in Auckland are more hesitant about raising their hand and driving the price out of reach of most locals?

          • Ross

            If you’re buying Kiwi dollars 25 percent cheaper, that’s the headline. Think about the “Asian buyers” who were hoovering property when NZD/USD was @ 0.85 who have worn it.. Fortunately (for them) they’ve had some pretty astronomical property gains to offset that.

            But anyway I am sure you can understand the currency risk aspect of financing from offshore.

          • Rebecca

            The point I’m trying to get across, is that the risk of “wearing it” reduces the power of the hoovering types you describe. As you note, the link between currency depreciation and the prospect of another OCR fall, is in that category.

            Seems to me we actually agree on this, via different words.

            In the past it has been true that what goes down must come up, and when rates start their inevitable eventual rise, once again those with access to cheap foreign money can romp all over locals. Until such time as a better mechanism than OCR manoevers is discovered: if NZ can manage a decent period of low inflation and therefore low OCR, that’s to the benefit of local house buyers as well as exporters enjoying a less-overvalued currency.

          • Ross

            I feel you’ve done a complete you-turn. You started with “Consider the ease with which those with foreign ties can borrow at ridiculously low rates in (for example) China or even the USA at the moment” but now concede that currency risk is high which would detract from the appeal of Kiwi residential investment.

            Nevertheless, we are on the same page, but the appeal is perhaps less than you initially claimed. It’s highly likely we will end our low-inflation cycle earlier than many other countries – those who can fund from offshore when the tightening cycle begins will be swimming in cash (think Scrooge McDuck)

          • Rebecca

            The topic of the post is the claim that lowering OCR disadvantages locals.

            I’m saying that the possibility of an OCR reduction does the opposite- in part by increasing the currency risk you describe. On this we agree.

            Whereas currency stability and/or the prospect of a rising OCR to which the Aussie banks will respond eagerly, is to the advantage of those who access cheap foreign currency.

          • Ross

            I think the one thing we can agree on is the Green’s have absolutely no understanding of basic economics.

            Edit: spelling

  • Kiwiracer

    It’s simple, when demand outstrips supply, just increase the supply, that is the only way to solve the housing issue.
    It’s the reverse of what the oil producing nations are trying to do, restrict supply to less than the demand to push the price up.
    Well, that’s the simplistic view.

  • Keeping Stock

    I’m loving low interest rates at the moment. My mortgage is split in two, and currently both are fixed for two years, rolling over on alternate years. Half of my mortgage is currently at 5.95%, but when that bit comes up for renewal in August I should be able to fix it for another couple of years at less than 5%.

    I am currently paying the maximum fortnightly amount that the bank will allow on both halves of the mortgage, and the principal is starting to drop significantly with each payment. My wife and I are already on track to take well over five years off the term of our mortgages, and the longer interest rates stay where they are, that will only increase further. I’m really struggling with Ms Genter’s logic on interest rates.

  • Mav E Rick

    The Greens are against Diary farming- our 2nd biggest export earner behind Tourism, against mining for anything – yet they are consumers of the minerals that are produced by mining. They want to increase taxes to pay for Carbon Credits and increased payments to the “disadvantaged” and now we learn they want to increase int rates as well. I think they should just have one policy – perhaps two, clean up the rivers and save the whales.

    • Dog Breath

      You also get to hang out with stoners and dreamers, wear anything made of hemp and take up living in trees. Sounds perfect.

  • Beeman

    When will we have a newspaper the has banner headlines” Greens want higher interest rates to punish homeowners” and “No Kiwis in Panama Papers” and all the other incorrect statements that Labour and the media keep putting out. Whaleoil talks to the converted, we need to let Joe in the street hear the truth!

  • rustyjohn58

    The Greens should stick to areas they know something about, like saving the environment. Oh wait they don’t do that either.

    • OneTrack

      Socialism first, then the environment with the Greens.

  • Hard1

    Why no housing crisis fire in Japan?. Decreasing population, that’s why. Our increasing population is the major driving factor in house price rises.
    “The shrinking population is already producing an increasing surplus of housing units. There are many sightings of abandoned homes in Tokyo.
    As of 2013, there were already an estimated 8.2 million unoccupied homes in the country, representing a record 13.5% of all residences.”

  • Sailor Sam

    Thus when the OCR is cut as expected and the trading banks don’t pass on that cut in their mortgage rates, will we see the greens applaud those banks?
    In light of a little strongarming of these same banks as suggested by labour, it seems that financial policies will clash in a green/lab partnership.

  • Mr_Blobby

    No I am not going to respond to this.

  • LesleyNZ

    If I were really selfish I would say YES to mortgage interest rates going up because the saved up money we “oldies” have invested is now earning us next to nothing in income because of the low interest rates. I have 3 children who have mortgages and I would rather that they are helped to pay off their mortgages with the lower interest rates. By the way – an excellent way to help pay off your mortgage is to have overseas college/uni students staying in your home. One of my sons is doing this. It does mean that your lifestyle is not as free as it could be and you do have to get a police check but the money received each week helps to pay off that mortgage so well and it is wonderful to have someone from a different culture living in your home. Contact the local secondary school – they are always on the lookout for families to take in students.

  • Keanne Lawrence

    As blatant stupidity sores in the Greens we ask why the Media party even bother to listen to them. Genter seems to be part of the Greens skirts gender quota also reinforced every time she opens her mouth.

  • shykiwibloke

    The truth is hinted at in the article:- the Greens are still annoyed oil is so low in price, and I would add that they are probably also dismayed the USA fracking has lowered their carbon emissions more than any Kiyoto signatory.

  • Stuff the homeowners, I can’t get a mortgage thanks to the rape and pillaging of my income to pay for bludgers like the middle class leaches on WFF and the outgoings of an ex wife.

    I’d be perfectly happy to see interest rates rise so at least my piddling little savings might grow a tad.

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