New documents released to Radio NZ show The Reserve Bank wrote to MBIE two days before the public release of the measure saying its new customer mortgage rate was “more relevant for assessing affordability” and the older series “probably wasn’t the best measure to be using anyway”& that the model used to calculate interest rates was about to be discontinued. The Government ignored the warning that its new housing affordability measure was using incorrect interest rates & that it could make houses look more affordable than they are.
• MBIE officials were most likely under pressure after delaying the measure multiple times and admitting they were worried that minister’s wouldn’t “agree” with it, but released it anyway – they however stressed that it was still an “experimental series” at the time.
• The Housing Affordability Measure (HAM) showed 80 per cent of current renters could not afford mortgage payments on a new home in their area & showed very low affordability during the last years of the previous Labour government. MBIE placed emphasis that it was a “comparative measure”, and that ministers have used the measure to defend their record on housing affordability.
• MBIE’s analysts knew of the advice but used the older series because it covered a wider timeframe; the measure goes back to 2003.
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