Editorial: Saving is the prudent option

Annemarie Quill thinks couples should save to put a deposit on a house rather than splash out on lavish weddings.

When I got my first job, I used to spend all my wages on my wardrobe.

An elderly lady who worked on the front desk churned out the same comment every day when I walked in: "Don't waste your money on clothes; you should save it."

I used to think she was miserable. Now I realise she was sensible. I wish I had listened because for the amount I spent on Fendi bags and Jimmy Choos, I could now be retired in a mansion on Marine Parade.

The Reserve Bank's new home loan limits on homes with less than 20 per cent deposit have proved unpopular with first-home buyers, some of whom complain they are unfair.

One couple we spoke to recently were shifting to Invercargill as they said they could not afford to buy here.

In September, we reported mortgage broker Chris Rapson of Rapson Loans and Finance said while a starter $215,000 house in Welcome Bay could be serviced easily by a salary of $40,000, it would be "highly unlikely" anyone could save the deposit of $43,000.

So I was astonished to read that young couples are splashing out up to $50,000 on lavish weddings, as reported by Ellen Irvine in the Bay of Plenty Times Weekend. Even a budget wedding was $8000.

Of course, not every first-home buyer spends large on weddings, or even gets married, but for those that do, they are hardly in a position to moan that they can't afford a house.

Spending $50,000 may give you a day to remember but it could also be a 20 per cent deposit on a $250,000 house.

The LVRs protect first-home buyers from being trapped in high levels of debt that they might not be able to service if interest rates rise in the next few years - which they are predicted to do.

They also monitor the stability of our financial system - something that affects us all whether we are an existing home owner or not.

The Reserve Bank rules may be viewed as miserable by some, but financially they make sense.