Expert says mortgage problems are a lot closer than people think
Experts have said that climate change can result in devastating property issues – including mortgage rates, Newshub reports.
According to a new report, rise in global sea level could have some devastating impacts on Kiwis as even a one-metre increase could cost the country a whopping $34 billion in both commercial and residential building damages.
Dr. Rob Bell, principal scientist at the National Institute of Water and Atmospheric Research (NIWA), warned that issues with getting insurance or mortgage are a lot closer even though sea levels might still take years to rise.
Read more: Government needs to invest in infrastructure while rates are low
Tim Grafton, chief executive officer at Insurance Council of New Zealand, also aired his concerns about impending property issues – including whether banks would still grant a long-term mortgage as climate change gets worse.
“What I will expect to see long before the water is lapping around the house is that the bank will say, 'our mortgage is for five or 10 or 15 years, it's not for 20 or 30 years’. As soon as you shorten the term of a mortgage, the number of people who can afford that diminishes,” Grafton told Newshub.
He added that brokers and people who want to buy coastal properties should be aware of any problems they may face in the future.
"I don't think people should be panicked, but I think there is a very clear realisation by people who live on coastal communities that there is an ever-growing risk around sea-level rise and climate change. There inevitably will be places in New Zealand where getting insurance is not going to be possible,” he said.
Roger Beaumont, chief executive at New Zealand Bankers’ Association, confirmed that banks might shorten mortgage for at-risk properties and won’t approve a home loan without insurance.
“It's quite possible that in time banks could require more equity or shorter-term mortgages when considering lending on potentially affected coastal properties,” Beaumont told Newshub.
