Home ownership

Press, 4 March 1981, Page 16

Home ownership

Sir, — We have a large number of clients wishing to purchase a new home, but are ‘unable to do so because of arranging enough finance. Where a person qualifies for a Housing Corporation loan of $24,000 and has a personal .contribution of $6OOO, could the .Minister of Housing, in simple, terms, suggest how they could raise and. repay the other $lO,OOO required at today’s interest rate? I would welcome an opportunity to discuss what I consider a desperate situation with the Minister. — Yours, etc. R. G. MAUGER. February 9, 1981. [The Minister of Housing, Mr' Quigley, replies: “Your correspondent R. G. Mauger asks how a client could raise and repay the other $lO,OOO to make up the purchase price. The Post Office Savings Bank will provide second mortgages up to $15,000 at 12 per cent on a 10 year term. Repayments on $lO,OOO equal $32.30 per week. However, the probability is that the majority of modest income earners cannot afford Mr Mauger’s new house. The nub of the correspondent’s problem lies in the cost of building. Whereas the price of new houses has moved in line with the rate of inflation, for existing homes the increase has been about a quarter of that. A recent sampling of Housing Corporation purchase loans in Christchurch disclosed an average house price of $22,254 in a range from $14,500 to $35,800. Acceptable loan proposals were available for these first home seekers. This situation has to be contrasted with $40,000 for the new house quoted by Mr Mauger. Obvi-' ously people — particlarly modest income earners — do not want to be forced to borrow on second mortgage and it was the recognition of this fact that led the Government to provide easier access to loans .for existing houses, rather than loans to build. This approach changed a policy which had been followed by successive governments for many years. The answer does not lie in subsidising the building industry with concessional rates of interest as Mr Mauger seems to be suggesting in his letter. I also note that your correspondent has so far not approached me for an appointment to discuss what he perceives to be problems in the building industry.”]