Property Institute of New Zealand
has announced its support to the decision to take debt-to-income ratios off the table as a tool available to the Reserve Bank.
In a recently held press conference, Prime Minister Bill English said that the Government will not give the Reserve Bank the authority to use the tool and that there is no need for the regulator to use extra tools.
The decision was applauded by Property Institute chief executive Ashley Church
, who said it was “fantastic news for kiwis” and that such tools are not the way to solve the housing crisis.
”Finally, we’re seeing common sense prevail,” Church said. “DTIs would have been a draconian addition to an already over-regulated mortgage market and their introduction would effectively have locked first home buyers out of the market. We’ve been a strong vocal opponent of this idea since it was first suggested and have been preparing a submission that was due to be submitted to the Reserve Bank by the end of the week.”
Regarding calls on the Reserve Bank to give Kiwis a timeframe for the removal of loan-to-value ratios, Church said: “We absolutely agree. The Property Institute has led the charge against these restrictions for the past two years and we’ve been particularly vocal in our opposition to their imposition on first home buyers who have been squeezed out of the market by them. It’s encouraging to see that at least one political Party is waking up to the damage they’re doing and we can only hope that the incoming Reserve Bank Governor will take notice and exercise a more informed approach to the market.”
In a report from the NZ Herald, the Prime Minister said that he expects the Reserve Bank to be working on conditions which would allow for the removal of LVRs, but “there's no indication at the moment that they're going to”.
According to Church now is the best time for political parties to declare their hand on LVRs and DTIs.
“It would be great to see a clear consensus on this matter so that we don’t find ourselves in this position again. Tools like these constitute an artificial constraint on the market and trade short term expediency for long-term solutions,” Church said.