“Today’s hike in mortgage interest rates is driven by Labour’s spending spree, and heaps even more pain on Kiwis struggling with a cost of living crisis,” says ACT Leader David Seymour.
“Adrian Orr told the Government he needed ‘more targeted fiscal policy’ to help fight inflation. Grant Robertson turned around and increased spending with a record $5.9 billion operating allowance. Adrian replied by putting up everyone’s mortgage.
“The Government hasn’t done its job, so now Adrian Orr is doing his. The problem is Adrian’s way will hurt.
“Kiwi families are facing record prices for everything they buy, while their mortgage rates are increasing as the Reserve Bank makes up for the Government’s out of control spending.
“Mortgage rates have increased at twice the rate of the OCR, swelling around 2.5 per cent in the past year as the OCR has moved from 0.25 to 1.5 per cent since August. If this trend continues, today’s 0.5 per cent hike in the OCR will lead to a 1 per cent increase in mortgage rates, that's an additional $5,000 a year, or $100 per week for the average household from this hike alone.
“To put this into perspective, prior to this hike the average mortgagee in Auckland had already endured an extra $587 per month in mortgage repayments since August 2021. If the OCR reaches 2.5 per cent then this will reach $1,066 per month.
“In case anyone thinks renters are safe from mortgage rate increases, they just have to ask themselves, who will pay a landlords’ mortgage, if not the tenants?
“To make matters worse, New Zealanders will face these costs with no tax relief. Beside rising prices and rising mortgage interest rates, Kiwi battlers are facing rising tax takes. Taxation per person has risen by $8,744 . The clearest way to stop inflation and the pain it’s causing would be to reduce spending and cut taxes.
ACT’s Alternative Budget for Real Change would have reduced Government spending and let people keep more of their own money. With the political will, the Government could back into surplus immediately, and cut taxes. A nurse at the middle of the income scale would be $2,300 better off under ACT’s Alternative Budget for Real Change.
“New Zealand’s COVID response has been a grand illusion, hiding behind the twin oceans of the Pacific and printed money. Now that ocean of printed money is washing up as inflation at the pump, the checkout, and the cost of housing.
“Kiwis are suffering from a perfect storm of reduced productivity due to border settings, and Labour’s spending addiction which are driving inflation. Last week’s Budget was a chance for Labour to right the ship, but instead it proved to ambitious Kiwis that they have no idea how to sort inflation and make New Zealand a prosperous nation again. It was the Brain Drain Budget.
“It’s time for real change. Everyday New Zealanders can’t afford to keep paying the price of Labour’s one-dimensional approach to COVID and pointless vanity projects.”