The latest interest rate rise will hit the fragile regional economies of New Zealand and hurt exporters by putting more upward pressure on the exchange rate, says Labour’s Finance spokesperson David Parker.
“The regions are already hit by dropping export prices for dairy products and timber prices plus they have flat housing markets from LVRs . Now they have to endure another interest rate rise which is a direct result of the Auckland housing price bubble.
"The Reserve Bank Governor has already said mortgage interest rates will get close to 7% by the end of the year, adding $233 to monthly costs on a $300,000 mortgage.
“New Zealand interest rates are already higher than interest rates around the world, which is one of the reasons our exchange rate is stubbornly high despite the drop in dairy and log prices.
“Home owners as well as exporters are now paying the price the price for the Government’s failure to control the Auckland housing crisis. LVRs, lending restrictions and now interest rates heading towards 7% are shutting out first time home buyers.
“The current Government’s policies are driving a wedge between Auckland and the rest of the country.
“Home prices have rocketed in Auckland while home owners in the regions are facing falling equity.
“Labour’s policies of universal KiwiSaver, CGT, an updated monetary policy and building affordable houses would take pressure off the Reserve Bank, interest rates and the exchange rate."