Are Debt-to-income restrictions on mortgages vote winners? Of course they’re not

Are Debt-to-income restrictions on mortgages vote winners?

Of course they’re not, and what’s the bet Farrar has been polling and focus grouping this.

Debt-to-income restrictions on mortgages are a long way off, even if the Reserve Bank decides it wants to introduce them, Parliament has been told.

Finance Minister Bill English was questioned about the restrictions today, after confirming last week that the Government and the Reserve Bank were discussing them.

“The Reserve Bank has yet to investigate whether the tool is workable, then it’s got to decide whether it wants to include it in the memorandum of understanding [with the Government], then it has to go out and consult everybody and work out how to apply it,” Mr English said.

Labour’s finance spokesman, Grant Robertson, asked Mr English about the potential impact of debt-to-income restrictions on first home buyers, but the minister said he wasn’t going to speculate on an issue the bank had just started working on.  

Debt-to-income loan restrictions are one of the tools that can be used to limit lending and cool down housing markets.

They mean the amount of a loan is linked to a person’s annual income.

They’re used in other countries, and in Britain the cap is 4.5 times annual income.

Labour doesn’t want them introduced.

“They will lock first-home buyers out of the market and make the Kiwi dream of home ownership a near-impossibility,” Mr Robertson said last week when the issue was first raised.

If Robbo wants to push these for the election then go right ahead…I mean he may as well do that since he hasn’t bothered to write an alternate budget yet despite being the one named to be the finance minister in a Red/Green alliance.



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