Property Institute of New Zealand Chief Executive Ashley Church, has issued a second warning that the introduction of ‘debt-to-income’ limits on mortgage lending has the potential to do significant damage to the Auckland housing market, and the wider New Zealand economy, if the Government gives the Reserve Bank the power to impose them.
• It was announced today that The Reserve Bank is proposing to set a limit on home mortgages of more than five times a buyers income and is asking the Government to allow it to have the power to do so.
• Ashley Church says the policy would also lead to a steep increase in rents over a very short space of time, as property investors would look for ways to increase income in order to buy more property.
• Ashley Church has said that the proposal could put thousands of small businesses at risk by restrict or eliminate the ability of small business owners to use the equity in their home as security for cash-flow .
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