I am not sure why, but I had assumed the Reserve Bank would move on LVRs yesterday. The same way I assumed they wouldn't cut the OCR the other day.
There was logic for not cutting the interest rates, but there seems little logic for not letting first-home buyers get back in to the housing market the way, I think, most would want and expect them to.
• No relief for first-home buyers as mortgage restrictions stay
• RBNZ warns house lending risk may be on the rise
• LVR restrictions effective but have some drawbacks - RBNZ
• Reserve Bank may loosen mortgage lending curbs
Now, often it is forgotten when we use terms such as "locked out" that it applies to everyone. We paint pictures with reportage of vast swathes of young people saving desperately and watching their housing dream shattered by the actions of the greedy Gen-xers or boomers who have had their chance at wealth and run with it.
The rules as they stand do allow low deposit it loans to be given, so it is possible to get a house with a 10 per cent deposit. The relaxing, or otherwise, we talk of, is merely whether the banks' books should be further expanding to include more loans in this category.
Part of my argument has always been that, given the state of the banks, they should be largely left to their own devices. They know what they're doing, they know how to handle risk, and they're not in the business of throwing money around.
No one wants a loan book full of bad debts, and banks haven't produced that. So why not just let them read the market, read the demand, and run their businesses the way they want?
Making the decision, or lack of it, means the housing market is off and running again. And all that means, if you're not on the ladder, the ladder is getting less and less accessible.
It is morally, financially, and socially irresponsible to prevent solid numbers of new entrants into a market . And if it continues too long, it simply means they never get to enter. We can't afford the next generation to come through as a vast swathe of renters.
The irony being, of course, that this Government has made renting harder and more expensive due to the huge number of new rules around it.
As I've said, if you want to limit money, do it with investors. Make the investor front half the cost, or more of the house. Because the particularly galling thing about the investors lot is that it's the leverage you get off the housing you already own that allows you to borrow more, and more, and more.
So the investor owns 18 houses while the first home buyers can't even dream of one, it makes no sense.
Adrian Orr and his mates at the Reserve Bank are left with a policy that encourages us to borrow and spend, and yet limits borrowers.
To be fair, he and previous governors have all faced the cold reality that the Reserve Bank has limited tools for a complex problem such as the economy. But in this case, he has a direct tool and a specific answer, and he's refusing to do the right thing.