New Zealand Labour Party

English should push back on debt to income caps

The Government has to stop outsourcing the housing crisis to the Reserve Bank and push back on Graeme Wheeler’s plan for blanket debt to income ratios, says Labour’s Finance spokesperson Grant Robertson.

“Debt to income ratios will lock first home buyers out of the market and make the Kiwi dream of home ownership a near-impossibility. Auckland house prices are currently ten times the average income. In the UK these ratios mean most people can’t get a loan 4.5 times their income. That would be devastating for house hunters in Auckland.

“If DTIs are going to be brought in they should target it at speculators, who often have low real incomes and are reliant on price increases to fund their investments.

“By agreeing to these tools Bill English will be admitting he hasn’t solved the housing crisis. The Reserve Bank has done too much of the heavy lifting on housing, while the Government stands by and does nothing.

“National has to take measures to rein in skyrocketing house prices and do it in a way that doesn’t put an end to the Kiwi dream of home ownership.

“First home buyers will be in uproar if they face an arbitrary cap that prevents them from buying a house. This Government is so out of touch ministers don’t understand that.

“Loan to value ratios have led to a surge in speculation, with foreign investors filling the void left by first home buyers locked out of the market. Blanket debt to income caps will do the same. National must clamp down on speculators and build thousands more affordable homes to stop DTIs becoming a reality,” says Grant Robertson.