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Wednesday, April 23

Another interest rate hike will punish mortgage holders

Green Party Co-leader Metiria Turei says another interest rate hike on Thursday will cost home owners an extra $25 a month on a $250,000 mortgage, on top of the $25 dollars a month from the previous rates rise, and she urged the Reserve Bank to hold off because inflation is negligible.

Mrs Turei questioned why a cash rate rise was needed when the annual inflation rate actually fell in the year to March from the previous quarter and March Quarter inflation would have been zero but for the government-imposed hike in tobacco excise tax.

“The current inflation rate is well below the Reserve Bank’s overall target of 2% and inflation in the March quarter was below their forecasts,” she Mrs Turei.
“Interest rate rises will eventually hit everyone’s mortgage whether they are on a fixed or floating rate. It comes on top of a similar rise just last month.

“$50 a month more on already stretched household budgets will be a big stress on families.”

The RBNZ last month became the first bank among developed countries to start hiking rates since the 2008/9 Global Financial Crisis and tomorrow is widely expected to lift the Official Cash Rate tomorrow to 3.0% from 2.75%.

“Any time the economy gets any traction, the RBNZ jumps on it with rate hikes that lead to a rising New Zealand dollar that clobbers home owners trying to get their heads above water.”

“The Green Party has long suggested a more actively managed housing sector to reduce the attractiveness and profitability of housing speculation.

“The Green Party would fund third party organisations to build significantly more affordable houses, and we would limit property speculation through a Capital Gains Tax and curbs on non-resident purchases of property.”