First-home buyers should be exempt from proposed restrictions to low-deposit home lending, Prime Minister John Key believes. Photo / Getty Images
First-home buyers should be exempt from proposed restrictions to low-deposit home lending, Prime Minister John Key believes. Photo / Getty Images
PM wants limits on low-deposit home loans not to hurt those who need most help.
Prime Minister John Key was adamant yesterday the Reserve Bank and retail banks could find a way to exempt first-home buyers from proposed restrictions on low-deposit home loans.
At his post-Cabinet press conference, Mr Key said he supported the move by the Reserve Bank that would see banks limit howmuch of its new mortgage lending could be made on high loan-to-value ratios (LVRs).
He indicated any measures negotiated would be unacceptable if they penalised first-home buyers at the expense of speculators and property investors.
"Yes I accept absolutely and endorse the view that the banks should be forced to use this as a legitimate tool.
"I'm not saying it's going to be perfect or there won't be some implications but for the most part we want those first-home buyers to get a chance to buy a home."
The Government has a dual problem: how to tackle a rising Auckland property market that is making housing unaffordable to first-home buyers, without using measures that make it even more unaffordable to first-home buyers by requiring even higher deposits.
Mr Wheeler indicated last week he would be talking with banks in July and making firm decisions in August about the LVRs.
Mr Key said that when banks came to implement the LVRs under new lending they would know exactly who their customers were, their assets and their income capacity. The loans to first-home buyers would be less than those for people buying second or third properties.
"So you can't tell me that the trading banks can't work with the Reserve Bank and make sure that those people are better looked after."