Bigger loans for building first homes

Press, 17 November 1982, Page 1

Bigger loans for building first homes

PA Wellington Bigger Housing Corporation loans will now be available to lower income earners wanting to build their first homes. The Minister of Housing, Mr Friedlander, said the new lending policy was an “endeavour to assist the building industry to some extent.” The Housing Corporation’s loan limit would be increased immediately by $5OOO, from $25,000 to $30,000, he said. The present level of supplemented loan assistance

would also be raised from $5OOO to $7500, to match savings in home ownership accounts dollar-for-dollar up to that amount. Mr Friedlander said the changes had been made because of a downturn in applications for finance to build new houses. The loan limit for people wanting to buy existing homes remains at $25,000. The earning limit for people eligible for Housing Corporation loans will not be changed. This remains at $3OO a week, plus $25 a week

for every child in the household.

Mr Friedlander said the Government had done its calculations, carefully, and he was sure the lower and “modest” income earners would be able to afford to service the bigger loans. The changes mean a person who has held a home ownership account for five years and has saved the allowed maximum, $10,250, can raise a total of up to $78,000 to build a new house. The first mortgage of $30,000 would be added to the amount saved to make $40,250. The increased supplemented loan, tied dollar-for-dollar to home ownership account savings, would be up to $7500, bringing the total amount to $47,750. Added to that would be the other benefits of the home ownership account schemes, including a purchase grant of 25 per cent of eligible savings and a Government interest subsidy calculated on savings record. These would add up to another $5560 to the amount available. The total amount raised would now be $53,310, and a second mortgage of $15,000 with a Housing Corporation

section loan of $lO,OOO would bring it to $78,310. The service costs on such a model would be initially $l2O a week. Mr Friedlander said people buying an existing house could work on the same model, but would get pnly the lower $25,000 first mortgage from the Housing Corporation. Their maximum amount would be $73,310.

Labour's spokesman on housing, Mr M. K. Moore, described the adjustments as a few more crumbs from the Cabinet table. He criticised Mr Friedlander as not being an effective advocate for homeseekers, saying it had taken a recent Reserve Bank warning that showed new house loan approvals running at a record low level before the Minister did anything. “Without changes to some criteria to open eligibility up, these changes will be next to meaningless,” Mr Moore said.

He asked Mr Friedlander for an assurance that the same number of new houses would be built this year as were built in the final year of the third Labour government in 1975.

The Government is considering giving tax relief to the racing, trotting, and greyhound industries. —Page 3

The new Soviet leader, Yuri Andropov, quickly got down to business after Leonid Brezhnev’s funeral yesterday by meeting key world leaders. —Page 9 In spite of a wide barrier draw, Mel’s Boy ran out an easy winner of the feature race at Addington Raceway last evening. —Pages 48, 49, 50