New Zealand Prime Minister John Key said he wants the country’s central bank to exempt first-home buyers from tighter mortgage lending criteria it is planning to implement.
“It strikes me that they’re the very people we’re trying to assist,” Key said at his regular weekly press conference in Wellington today. “So I don’t want to see tools implemented that lock them out of the market.”
With house prices surging in Auckland and Christchurch, New Zealand’s largest and third-largest cities, the Reserve Bank has said it may seek to restrain bank lending by imposing limits on the proportion of risky mortgages they can hold on their books. The proposal is to lower the number of loans made at more than 80 percent of a property’s value.
The RBNZ is reluctant to raise interest rates from a record-low 2.5 percent because inflation is running below its 2 percent target and it doesn’t want to fan gains in the New Zealand dollar.
Key said the aim of the new mortgage lending measures, which the Reserve Bank negotiated with the government, was to help rein in house-price inflation, not make it harder for poorer people to enter the market. He had made his views known to central bank governor Graeme Wheeler.
“I think they’re sympathetic to what I’m saying, but there are challenges,” Key said. “I understand that, but in the end I don’t think it’s as challenging as everybody says.”