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David Hargreaves says the alarming rise in high debt-to-income ratio borrowing highlights why the Reserve Bank should be allowed to implement across-the-board DTI limits without any exceptions

David Hargreaves says the alarming rise in high debt-to-income ratio borrowing highlights why the Reserve Bank should be allowed to implement across-the-board DTI limits without any exceptions

By David Hargreaves

If the Reserve Bank had wanted to drum up an advert for why it should have the ability to apply debt to income limits (DTIs) on mortgage borrowers, then it couldn't have done better than the latest mortgage DTI figures.

Alarming, is how I would describe the figures.

The highlights, or lowlights, depending on your perspective, of those RBNZ stats included the fact that in December, nationwide, nearly half of the money borrowed by first home buyers (FHBs) was at DTIs of five or above. In Auckland nearly two-thirds of FHB money was borrowed at DTIs of five or above. Wow. 

It wasn't just an FHB horror show though. Nationwide, the owner occupiers borrowed 42.8% of their money at DTIs of 5+, while for Auckland owner-occupiers the percentage was 57.2%.

To refresh memories, here's the full list of percentages and comparisons with September 2020 and December 2019 that highlight how rapidly the amount of high DTI lending has risen:

Group Dec 20 Sep 20 Dec 19
FHBs nationwide 48.8% 43.3% 39.3%
Auck FHBs 64.8% 57.5% 55.3%
Non-Auck FHBs 35.9% 32.3% 26.9%
Other owner/occ nationwide 42.8% 37.7% 30.7%
Auck other owner/occ  57.2% 49.0% 46.9%
Non-Auck other owner/occ 31.5% 30.3% 24.1%

The swift rise in the amount of money mortgaged at DTIs of five and above should not have been surprising, given how far and fast house prices rose at the end of 2020, but that didn't make the figures any less alarming. 

And we are talking about very big sums of money here.

In December, nationwide, the average-sized FHB mortgage was a touch over $505,000. Go back five years to December 2015 and the figure was just a little over $337,000. So the size of mortgage for an FHB has increased by about a half in five years.

If we look at the total of new mortgages, IE ALL new mortgages (over $9.6 billion of them!) in December 2020 the average size of each mortgage was $337,500, compared with just $186,500 five years ago. So that's actually an over 80% increase. But of course the FHB mortgages were that much bigger to start with.

How have we been able to bear such a steep rise? Well, plunging interest rates.

In fact, the irony is that even as the mortgages get to such eye-watering sizes, our ability to service interest costs has never been better. 

A debt burden we can afford - for now...But later?

The RBNZ's quarterly key household financial statistics also out this week, showed that in December 2020 total interest payments as a percentage of household disposable income were running at a historic low of 5.8%. That compares with a peak percentage of 14% in September 2008.

So, debt's raging -  the same RBNZ stats show that in December household financial liabilities (including rental properties) were running at an all-time high of 166% of disposable income - and yet we can afford it.

So, no problem, huh?

Not now, no.

But we could have a lot of problems, very quickly, once interest rates do start to rise again. The debt that has been racked up by Kiwis now ain't going to be wiped off in five minutes.

So, even if interest rates don't start rising for say three years (and I think it will be a fair bit quicker than that), once they do, we could be in a bit of trouble. 

Interest serviceability is one thing. The sheer size of debt now is another.

And remember, the latest RBNZ figures take us up to just December. The house market raged all through summer. The DTI figures for the March quarter when they emerge will be worse.

The RBNZ has wanted the ability to be able to apply limits on high DTIs for some years now and has been frustrated by central Government pushback (firstly from the National Government in 2017).

The problem with targeting

Where we are now with this issue is that the RBNZ is to report back to Finance Minister Grant Robertson in May with recommendations about potential usage of DTI limits.

But there's a problem.

Robertson has made clear he wants DTIs targeted at investors, while RBNZ Governor Adrian Orr wants them to apply generally.

I'm with Orr on this and would have to ask at this stage the not-rhetorical question: What should DTI limits be used for?

Well, I would say as a measure to preserve financial stability.

But is that what Robertson wants?

His desire to target investors - and to leave FHBs untouched - looks clearly political.

The FHBs have been knocked before

Look, I get it. The first iteration of the RBNZ's loan to value ratio (LVR) restrictions in 2013 knocked back the FHBs badly. It did block many from being able to buy houses.

Any blanket introduction of DTI limits would run the risk of beginning to lock FHBs out of the market again - and that would politically be a bad look for Robertson and Labour.

But look at the DTI figures.

If financial stability is the concern - and it should be - how on earth could you introduce DTI limits and NOT include the FHBs? They are clearly the most affected group.

Of course, giving the RBNZ the ability to use DTI limits doesn't mean the RBNZ would have to use them right now.

It may well choose to wait and see now how the combination of reintroduction of the LVR limits and the Government's new housing policies - including removal of interest deductibility from tax for investors - works to cool the housing market.

It should be for everybody

But there's no question, I think, that the RBNZ should have the ability to implement DTI limits - for everybody - if it feels it needs them. And that would be for financial stability. Not for any political considerations.

If Robertson were to keep pushing the RBNZ and insist that the FHBs be exempt, what would we be supposed to take from that?

Would he be prepared to underwrite FHBs? Would he be prepared to say they could not ever be allowed to fail if they borrowed up to the gills and got into financial trouble?

Would taxpayers be invited to bail out any who failed?

It would be on Robertson if he insisted on FHBs being exempt from DTI rules - and then a number of FHBs got into trouble.

I've got every sympathy for first home buyers trying to get into this crazy market. It's hard. It's brutal.

But we can't as a country put ourselves in a position where we start to say that the normal rules don't apply to them; that they can be allowed to take enormous risks without fear of repercussions.

Too expensive

The simple fact of the matter is that right now houses, particularly in Auckland, are too expensive.

That only gets fixed either by prices falling or by wages rising significantly (and there's no sign of either at the moment).

Maybe the combination of LVRs and the Government's new housing policies will start to help a little in a few months.

But in the meantime, what we would not need is for large numbers of people to get into financial trouble. And logic suggests if that were to happen, the FHBs would bear the brunt.

I understand the politics of it, but I reckon Robertson should gracefully stand aside and give the RBNZ the right to apply DTIs.

And then let the RBNZ decide if that's the way to go.

If some serious steam doesn't come out of the housing market soon then I reckon we really will need DTI limits in place. With no exemptions.


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83 Comments

13
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Yeah, the 4 yr lead in to non tax deduct-ability levels the playing field. I agree that the DTI should be uniform as well. It would hopefully stop FHB's taking out super risky huge mortgages.

29
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Debt to income restrictions applied to everyone at a sensible level of 4.5x income would crash the housing ponzi.

This is why it won't be done.

People are not locked out of home ownership by access to debt they are locked out by high prices.

17
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You are welcome to sign this petition Brock, let’s see if we can get 1000 people signing it.

https://www.change.org/p/grant-robertson-restrict-interest-only-loans-wh...

10
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I've signed.

I have signed too.

That's why you would start at 6 x income and reduce it by . 2 per year until you land on your target, so in 5 years you would be at 5 x income

Never going to happen guys. Houses in NZ have never been down at the DTI levels people are claiming they now need. Even back in 1990 and I was on good money the magic DTI of 3.3 that was imposed by the banks was a waste of time, all it did was totally lock me out of buying a house. DTI is not going to change the house prices, all it will do is lock you out of the market. You need to be able to max yourself out financially if your motivated and the DTI will just further reduce those getting a house. In the later years of paying down my Mortgage, 80% of my take home pay was going on paying it down.

Brock are you sure it is only prices? If it was purely high prices then why were 150k, 3 bed, tidy enough first home in Hastings, Palmerston Nth etc etc 5yrs ago not flying off the shelf to first home buyers? They didnt want them. Was it because prices had only gone sideways or down for a number of years in regional NZ? Because there wasnt FOMO? Because you could easily rent something nicer for less at the time so why buy the cheap starter house? If prices are fat you can always do it next week? Then you miss out and scream blue murder... not because there never was the option but because you missed it.

I completely agree prices have now got out of wack due to one, cheap money, and secondly restricted supply, but this is different to house prices being cheap somehow = 100% home ownership.

A debt servicing ratio of 35% on the highest earner only on P&I would be better. People have babies, illnesses, accidents, redundancies, etc, so counting all household income is very risky and it has been for 20 years, hence the recurrent crises.

14
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Is there a way to report on what % of the borrowers are in 6 times, 7 times, 8 times and so on? It will really interesting to see how deep we are venturing down the rabbit hole?

I agree DTI should be on everyone. It might appear that Robertson is helping FHBs with exemption but he is throwing them to the wolves who just want a bit of flesh.

NZ is in desperate need of some sanity when it comes to household debt.

You could use a normal distribution curve quite easily on this but at a guess you would be looking at roughly 15-20% at 6 DTI 10 to 15% at a 7 DTI and then 5 to 10% at a 8 or higher DTI. Those on 8nterest only loans would usually be pushing a 8. I’ve been looking at a mortgage borrowing a 2 to 3 DTI but but ANZ wanted to offer a 8 DTI amount and Westpac would only offer 5. So there is some big variations between banks

NZ is in desperate need of some sanity when it comes to household debt.

RBNZ claimed around two-thirds of households have no mortgage debt, but nearly 40 percent of new mortgage loans are to borrowers with DTI ratios above five, in the May 2019 FSR - page 7 (13 of 48) PDF. Household debt as a % of disposable income looked like this.

36
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"The simple fact of the matter is that right now houses, particularly in Auckland, are too expensive.

That only gets fixed either by prices falling or by wages rising significantly (and there's no sign of either at the moment)."

You can see it, Orr and Robertson can see it, everyone not blinded by greed can see it ....and yet here we are.

If orived that Orr and Robertson can see it and still nit acting, which they are suppode to than shoukd theynot be dragged out on road and........

FHB have no choice but to react... That time is nit far away.

They won't do it in that case because all decisions are made with the next election in mind.

19
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If they do care about the next election then they should definitely be implementing these measures. I’m
A FHB and I work with several aspiring FHBs and they are fed up. They are worn out, dejected and sick and tired as we were when we bought our home but even more which is very hard to see.

They will all be swinging to Greens who seem to the only party saying the right things about the housing situation.

15
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TOP are the only party who will do anything to solve this problem.

In no way way did passerby say or even infer the Greens would actually do anything.

17
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Agree David as it is not only to control ever growing housing prices / crisis but is more important to protect buyers specially FHB who under FOMO are borrowing in extreme and in many cases a slight change in interest rate or circumstances may result in forced sell.

To control speculation in housing market, should have controlled Interest Only Loan earlier ( long time back) instead of waiting.

In fight against housing crisis, the biggest crime by RBNZ and government is having cold feet on IO loan and trying to avoid / delay.

Wonder if are doing on purpose to support their hidden agenda of enjoying house price touching new height every week and what they are trying to portray in public domain is a farce as no other reason can justify their inaction on Interest Only Loan and DTI.

15
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Totally agree. By not doing anything, the Reserve Bank has made things much worse.

All comes back to the CPI figures, if the real inflation was past on we would not need all this rules. And avoiding the mess that is still coming. But they just keep digging.

15
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Not including house prices in the CPI makes inflation figures meaningless.
It is the most expensive item for most people

Not mist oeoole but all, who are renting.

Not including is for a purpose....

By doing "something" it's the government that's made things much worse. It's not the RBNZ's fault. Look at the RBNZ C5 credit data (see here). Something very ugly is brewing under the surface. Housing and business loan velocity and acceleration are at opposite extremes. That's never happened even during the GFC. The private debt Ponzi is predicated on an unstable housing market. The government has tinkered with the fundamental drivers of loan growth which could easily precipitate a sharp debt deleveraging in housing credit at the worst time. It might work out okay as the government is kowtowing hard to the CCP (see here) who're encouraging more capital outflows right now (see here). So we could see a repeat of the foreign buying frenzy that happened under John Key, but I posit that's hardly a great outcome for most New Zealanders either.

Is there any reason why your first link points to mega.nz, a successor to Kim Dotcoms megaupload, rather than an RBNZ link which would be more acceptable than a file hosting site.

I wrote the R code to calculate the first and second derivatives of the RBNZ debt data and graphed it with ggplot2. Mega is quite convenient to display such graphs. If you want the raw data just google "RBNZ C5" and download the spreadsheet.

People selling a business, settling outstanding debt, and buying houses?

Thanks for this. I hadn’t realised how far consumer and business lending had tanked, while housing lending has soared. I agree this is a very unstable and worrying place to be.

23
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Agree. Narrow minded politicians trying to please rich and powerfull.

Jacinda Arden should have rose to demonstrate that she is a leader who has been blessed with an opportunity to reset but alas is just self centered thick skin, manipulative politician who is not able to look beyond election and power.

Missed opportunity for Jacinda Arden and for NZ for trusting her with high expectation. Big Shame.

12
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Jacinda has sold NZ out to.. other interested parties

Four international banks , a twenty year experiment, a national problem. 2020 was literally spent propping up the housing market, households and banks . 2021 is being spent on the best ways to kill the same.

DTI-5 for a 100k income is 500k. Which at 3 percent fixed for five years is 15k pa interest. The international standard for housing cost is one third of income and the above is under half that. The above example is cheaper than renting and easily affordable, go figure why there is such a lot of handwringing over DTI

You have described a DSR (debt servicing ratio) not a DTI

You might want to go to Specsavers and take a closer look... 500k loan is DTI5 on 100k income

Specsavers? There've got a shop right next door to Barfoot and Thompson haven't they?!
"at 3 percent fixed for five years is 15k pa interest." is the Debt Servicing Cost noted by the above poster.
And that's Before Tax and doesn't include Principal Repayment.
Oh, and renting should, always be more expensive than owning. Anyone whose been a landlord knows there are all sorts of 'hidden' costs that inflate the true ROI.

The fact we teach our population that "the second that the maths shows you it's cheaper to buy than rent - go out and buy!" is partly why we find ourselves in the disastrous situations that we do.
Ownership and owners have their place. So do landlords and renting.

HW2 - exactly needs to be affordable so that people not only pay mortgages but also have left over cash to pass around to the wider economy and grow the economy.

Are you in support of 65% of FHB borrowing more than 5 times their income?

Have you considered tax?
Have you considered what happens when a FHB begins to have a family and is down to single income during parental leave?
Have you considered cost of raising a child (childcare when one wants to return to work?)
What happens in 5 years if the interest rates are then at 6%?
FHBs are your typical start up buyers who get a home and start a family. The biggest expense of starting a family is in the beginning.

Can’t buy anything for 500k in Auckland / Wellington. And considering the principal irrelevant - I get that’s how people think now, which is part of why we’re in this situation, but when you have a chain of buyers each just paying interest while the price goes up — *someone* has to be left holding the bag...

What the DTI policy does is limit house ownership to those with extremely high incomes or those with deposits of over 50 percent. Of course the policy and the arguments in favour of such a policy implementation is completely off the planet

12
up

DTI is a tool, if not now than when but RBNZand Jacinda Arden are already late in banning the tool used by speculators - Interest Only Loan.

Both are surround by people giving vested and biased advise and irony is that are such big $#%& that so called economist and experts may even succeed in making them believe that it is 12 midnight, when the sun is shinning and is actually 12 noon and sadly both will be so convinced that will even pinpoint to the moon ( which actually is a sun).

This is not a shame but tragedy for the country that, we as a country are run by such ...........who are either themselves knowingly doing or undoing what they are or are been manipulated by their so called advsiors.

19
up

DTIs are a clumsy macro regulatory tool.
The key tool to level the playing field is discouragement of interest-only loans to property investors.
KeithW

12
up

It seems control on Interest Only loan gets unanimous support from everyone as all logical thinking and even data suggests and support BUT still why is Mr Orr or Robertson so confused, may be, they want but people surrounded them are trying to stop them for vested reasons.

Jacinda Arden took a bold decession or punt to change tax on investment property so why hesitant with interest only loan, specially in this case even evidence suggests that should be IMPLIMENTED as soon as. If she or anyone has any other option to control speculative demand or reasons for not controlling interest only loan, should spell it out.

Will also highlight that she gets away with silence or avoiding talking on it as no media or journalist have asked / grilled her on this issue as may be not in their interest also and they too hoping that it passes by and not acted upon.

15
up

Yes DTI are clumsy. But sometimes it takes a hammer to get a point across. I'd also amend you sentence to:

"The key tool to level the playing field is discouragement of interest-only loans to property investors."

Make any secondary+ property a retail investor wants to take on, fully funded by the buyer - cash, in other words - not revaluation of the previous holdings.
Restrict debt to commercial developers at commercial rates of %, and get the ingrained idea that "Mum and Dad investors are the backbone of our property market" out of favour.
Mum and Dad should own their own home, and any additional capital (not debt) they may have they are free to do whatever they like with it.
If we don't act soon, Mum and Dad are going to be homeless in their old ages, by the hundreds of thousands worth. And those citizens are the excluded FHBers of today.

Agreed. Precise solutions are needed.

14
up

The RBNZ turning a blind eye to the use of interest only terms in a low interest environment is just a woeful dereliction of duty. When you run the numbers you see that interest only terms means your monthly payments are half an equivalent principle and interest loan on 30 year terms.

Interest only loans only work when prices are rising. So if we do get some sort of downturn and prices start falling it will be greatly amplified by IO terms being forced to PI terms reenforcing downward pressure on prices

"The RBNZ turning a blind eye to the use of interest only terms in a low interest environment is just a woeful dereliction of duty" - perfectly said.

Orr must be sacked and the management of the RBNZ replaced immediately. We need somebody in charge who is going to look after the longer term health of the NZ real economy, rather than just a minority of specuvestors. It is time to address the NZ housing Ponzi once and for all.

All these rules and regulations just put interest rates up

16
up

Is this the time to have discussion on DTI or INTEREST ONLY LOAN or is it the time to act.

Act or not to act, cannot do much as it is us kiwi who voted them to power but what is not good is the silence on this burning issue from their side.

Transparency and communication is lacking, which is not good for democracy so my issue is deafening silence and another major concern is silence on this issue from media and journalist.

On DTI people may have different views but for stopping interest only loan, everyone who is interested in controlling speculative buying is supporting it and if am missing any genuine argument in favour of interest only loan, will like to hear from Jacinda Arden and Mr Orr - though can spin and manipulate but will atleast expose.

"But in the meantime, what we would not need is for large numbers of people to get into financial trouble. "
Not sure I agree with this statement.
Infact I'm of the opinion it needs to happen so as to see the price of risk reestablished in a market that now believes there is none whatsoever.

The purpose of any measure and regulation is to avoid ponzi and in the process if Speculators are targeted, is it not what is the aim.

"Maybe the combination of LVRs and the Government's new housing policies will start to help a little in a few months.

But in the meantime, what we would not need is for large numbers of people to get into financial trouble. And logic suggests if that were to happen, the FHBs would bear the brunt."

I couldn't agree more!

17
up

Ban what should never have been allowed in the first place. BAN INTEREST ONLY LOANS IMMEDIATELY.

14
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Borrowing over 5 time is alarming but many FHB have DTI over 7 times, so what will that be.

The entitre ystem is sickening as is working to serve inflated individual / self egos for sadist vested reasons.

Mr Orr is so onto himself that us beyond reasoning and unable to see the reality which may not suit his narrative.

Instead of banning Interest Only Loans the RBNZ and Roberston could "fix" the IO interest rate at 6% or charge line fees
Howzat. Easy as. Fill yer boots

Checking out if there is any differential between the cost of interest of Interest Only Loans and Ordinary Mortgages. Came across one financial site that rates IO loans at currently 4%. No dates given so that rate could be out of date.

NB: The borrowing rate page on interest.co.nz does not cover interest only loans

ANZ Commercial Bill Facilities have a minimum lending amount of $500,000 and a maximum term of up to five years. Fees and charges apply including a Usage Line Fee, Commitment Fee, Bill Handling Fee and Early Repayment Costs. Line fees can be up to 4% on top of the bill rate

None of the governments business what a lender and a borrower contract to lend or borrow.

None of the governments business what a lender and a borrower contract to lend or borrow.

Dongleberry...what complete rubbish. Interest only loans are not only increasing the risk on the banking industry but the whole of our financial system as well. Not to mention that the good old tax payer will end up bailing them out if things go south. I guess you also feel that it is none of the Govts business if a buyer and seller of meth want to conduct a little business. It seems you either can't see or do not care about the catastrophic damage this irresponsible lending could do to the whole country if left unchecked.

Sure, if the lender is lending their own money i.e. retained earnings. But they're not, it's a combination of depositors money and money issued from "thin air".

Nzdan..yes also true. When I put money in TDs 18 months ago I did not factor the risk created by the banks agreeing to grant interest only loans to more and more greedy investors. The banks (and investors) have (unfairly) forced more risk onto my TDs, which were taken out mainly for safety.

Just an observation that one may need to get their head around and just to ruin your Easter Sunday.
Underlying the discussion is the expected norm that most people will be able to afford a home and that by retirement the mortgage will have been paid off.
The reality is that homeownership for 25 to 35 olds has fallen from 65% to 35% over the past 30 years. That trend has been consistent over the 30 years and the low percent being three years ago so both predates Orr and his recent actions.
The reality is that those who are having to take on large debits is that they are going to take some time to clear that especially if mortgage rates rise.
So the reality is that both homeownership and mortgage free by retirement may no longer be the cultural norm for the future. One is going to be either renting for life or paying of a mortgage for life.
Don’t agree with it, just highlighting what may be the new reality rather than a case of assuming same old, same old.

Figures from a few days ago paint exactly that picture. Expect 18 years to save for deposit plus a 30year mortgage.

10
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That will suit the banks... spend a lifetime paying it off only to then almost get there then do a reverse loan.

Good comment and if FHBs have raided their Kiwisaver accounts for home deposits, they will find it tough. As a retiree, I know I couldn't afford a mortgage as things like rates, water, electricity, groceries, petrol, internet - everything is going up, but I no longer have wages (or interest income) to help with the short-fall. As you say, reverse mortgages may become the norm.

P8...If there are large numbers of people who have to pay a mortgage for life that is OK by me. There is the option of a reverse mortgage later in life to ease the financial strains of still having a mortgage once retired. This would attack the class system where children of property owning parents are not gifted such an advantage simply through birth.
However, I believe we should do everything possible to help FHBs into the market. It is unacceptable to have a society where many are forced to rent for life with no way out. And if helping more people into their own homes comes at the expense of investors and foreigners that should not concern us one little bit.

"This would attack the class system where children of property owning parents are not gifted such an advantage simply through birth." I guess you aren't a fan of wealthy parents paying for private schools or doing anything to give their children a step up? Heaven forbid, a wealthy parent bequeath assets to offspring. Get over it, social darwinism is a real thing. Nz is riddled with parents who disadvantage their children by choices-drugs, gangs, no father figure etc, but you'd blame the landed gentry.

I think I just vomited in my mouth a little bit.

Me too. Social Darwinism... ugh.

Cheetah...yes social Darwinism is a thing but IMO it is a negative and very unfair thing that we should strive to change. Being able to afford a good education for your kids while others cannot is a real part of the problem. And as with greedy investors it is not the parents fault. They are just doing the best for their kids as most parents would. But I do feel it would be a better society if we were to find a way to ensure less financial advantage was passed down from generation to generation perpetuating inequality. Regardless of how talentless and lazy my kids are they are going to have it very easy (financially) compared to their friends simply because Dad was a young property investor at the right time. And that does not seem fair to me.

I completely agree with your last part about lower socio-economic parents not helping their kids through bad life choices. They need to help themselves and yes I agree this is an equally big part of the problem. It is just that this side of the issue seems all but impossible to solve. How can we change family values that are passed down? I do not think we can but we can change the amount of wealth passed down if we want to.

If their is any chance of prices falling, then a DTI constraint would be good as it would stop FHB from loosing their equity by rushing in now. Far better to not make it easy for the investors to sell their houses and escape the consequences of their greed at the expense of the victims of it.

Well done David for understanding that DTI need to be applied to everyone, not just investors. Why would you want to protect investors and not FHBs, it doesn't make any sense.

11
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Yvil..You may be missing the point. The biggest issue in regard to the property crisis is that a reducing number of kiwis can afford their own home. The idea is to rid the majority of investors from the market leaving homes for people who wish to buy them for shelter and security rather than scalp them for personal financial gain. Helping more kiwis to get into their own home should be the primary goal and a big part of that is to ensure only a small number of investors wish to remain in the market.
I feel banning interest only loans quickly will help to achieve this goal and needs to be part of the Govts "investor disincentivization programme". What do you think SHOULD happen to interest only loans and why? I am interested in your views.

Karl S, as stopping interest only loan could be effective, it is highly unlikely that Jacinda Arden or Mr Orr will act on it.

Under pressure will not decline immediatly but will find reason to avoid implimenting any action on it or will play with time.

stu... I fear you are right but then again they did surprise last week so who knows.

Dp

Karl it is you who is missing the point by confusing what you would like to happen with what the actual rules are. The RBNZ has no mandate to "bring the price of houses down" = your wish. It has a mandate to provide financial stability to the NZ financial system and the RBNZ sees the DTI tool for that purpose, not to satisfy your personal wish.

Thing is, at this stage, applying DTI (however it’s applied) being implemented will destabilise the economy.

DTI will stabilise things in the long run but the immediate effect would be considerable; possibly the treatment seems worse than the disease. We should never have gotten into this lose lose situation to begin with.

Thing is, at this stage, applying DTI (however it’s applied) being implemented will destabilise the economy.

DTI will stabilise things in the long run but the immediate effect would be considerable; possibly the treatment seems worse than the disease. We should never have gotten into this lose lose situation to begin with.

This logic is Every time thrown whenever their is talk on controlling the ponzi, nothing new.

More DTI, it is interest only loan that should be stopped if any of them any sense and are serious.

The last sentence, is just something in the past that cannot be recalled back. So, what to do going forward for the future? NZ got precisely what it deserve right now, similar to badly cancer diagnosis. Always, find away of flip-flopping in the past denying the laboratory results when it's still in stadium 1-2, now accelerate the stadium 3 into 4 towards terminal point. Reluctantly, now try to accept the nasty treatment of Chemo & Radiation.. by the looks of it? bad vomiting will be considered as destabilise the F.I.RE economy, so potentially the treatment would be reversed or aborted altogether...paving a path of sailing away, the nation of 3.5mil into Hospice care, waiting time. The 1.5mil outside, can at least foretold the NZ stories to the rest of the world.. What is the result of governance that being dictated by greed.

Im all for banning I/O loans but DTI restrictions would be stupid. It would be fairer to place tougher restrictions on UMI needed to take out the loan then you account for actual affordability (expenses) not just the number on a pay slip.

Tell that to the Ireland & others that do implement/even to partial level of DTI. Yes, UMI would be fairer for tougher restrictions.. but who are we kidding here in NZ? The OZ Banks silently lobbying hardly to both RBNZ & govt, precisely not to be tough (No vested interest, Yea rite). Hence, all those distortion economic parameters, artificially floated/reported or shifted to different mechanism of reporting (aka manipulation).
Relative view to be reported, facing forward your right hand is my left hand, 90% about to go bankrupt.. naa, it's 10% growth so far. Gulp.

When it comes to specu leverage, that group need saving from themselves, and from putting the rest of us at risk of system failure. We also have to prevent them from holding tax payers hostage for the risk (bank bail out). Bring Dtis in.