11 per cent mortgage rates again?

Published: Thu 12 Oct 2017 12:06 PM
11 per cent mortgage rates again?
New Zealanders may pay a much higher price than they imagined if the last two times New Zealand First held the balance of power are any indication.
"The last two times that Winston Peters held the balance of power, mortgage rates hit eleven per cent and the country went into recession. It wasn’t a coincidence," says ACT Leader David Seymour.
"The mechanism by which Mr Peters pushes up mortgage rates is unhinged Government spending demands.
"Some people will blame external factors such as the Asian Financial crisis of the late 1990s and the Great Financial Crisis of 2008, but with Mr Peters domestic policies, New Zealand achieved eleven per cent mortgage rates all by itself, says Mr Seymour.
"New Zealand First politicians have boasted that they secured $5 billion of extra spending in 1996, big money in those days. Having been a cautious fiscal manager for his first two terms, Finance Minister Cullen threw caution into the wind from 2005-2008, and mortgage rates again hit 11 per cent.
"Excessive government spending sucks up resources and causes inflation. Under these scenarios the Reserve Bank is forced to raise interest rates, as it did in the late 1990s and mid 2000s.
"The last two times Mortgage rates reached eleven per cent, we had much lower house prices. The kind of loose fiscal policy and high Government spending associated with a New Zealand First Government would be catastrophic with current house prices.
"The great irony is that Kiwis will pay more to Aussie owned banks thanks to Mr Peters’ policies."

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