Twyford Phil: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeTwyford Phil: Questions for Oral Answer — Questions to Ministers[Sitting date: 05 September 2013. Volume:693;Page:13326. Text is incorporated into the Bound Volume.]12.PHIL TWYFORD (Labour—TeAtatū) to theMinister of Finance: Has he been advised which banks have put up their interest rates or bank charges since Loan to Value lending limits were announced?Hon BILL ENGLISH (Minister of Finance): I have noticed media reports of some banks lifting rates. On inquiry it appears that they are adding to their lending margins in response to action taken by the Reserve Bank some time ago to increase their capital weightings against low-deposit loans. This is a quite separate and different measure from the restrictions on the number of low-deposit loans.Phil Twyford: Can he confirm that none of the four big banks—ASB BNZ ANZ and Westpac—have prioritised first-home buyers and why does he think the Minister of Housing Nick Smith told the House yesterday that “The banks have said that they are going to give priority to first-home buyers.” when none of the big four banks have said that?Hon BILL ENGLISH: I am not aware in detail of what criteria the banks are applying. The Government has certainly prioritised first-home buyers with its changes to Welcome Home Loans and KiwiSaver subsidies. What I can say is that borrowers are enjoying an average floating mortgage rate at the moment of around 5.8 percent. In August 2008 it was 10.7 percent.Phil Twyford: Did he ask the major trading banks to prioritise first-home buyers once the loan-to-value ratio lending limits were announced; if so what was their response?Hon BILL ENGLISH: We held some discussions with the banks in order to inform the Government on its own policy in respect of first-home buyers but the banks clearly do now reserve and always have reserved the right to make their own commercial decisions. I suspect some of them will try to differentiate and others will not.Jami-Lee Ross: What statements has he seen in support of limits on high loan-to-value ratio lending?Hon BILL ENGLISH: Actually I think that one of the first times that I heard about this idea was when it was mentioned by Phil Twyford who apparently was the housing spokesman for the Labour Party who believed that having restrictions on high loan-to-value ratio loans might actually help cool down the housing market. If he still holds that position then certainly the Reserve Bank Governor agrees with him. I am still a bit of a sceptic.Phil Twyford: I seek the leave of the House to—[Interruption]Mr SPEAKER: Order! This is a point of order.Phil Twyford: I seek leave to table the results of a survey of the major banks showing that none of the big four banks—Mr SPEAKER: Order! What is the source of the document?Phil Twyford: It was published in theNew Zealand Herald.Mr SPEAKER: Then that document will not be tabled. Has the member got a further supplementary question?Phil Twyford: I do Mr Speaker.Mr SPEAKER: Then he can ask it.Phil Twyford: Why did he allow a full month to pass after signing off a memorandum of understanding giving the Reserve Bank the power to use loan-to-value ratio limits before he requested advice from officials on the impact of loan-to-value ratio limits on first-home buyers?Hon BILL ENGLISH: The impact of any of the measures under the macro-prudential regime has been discussed on and off actually for a couple of years. Certainly when the Reserve Bank announced that it was going to formally consult then we formally took advice so that we could discuss with the Reserve Bank the intriguing idea put up by the Labour spokesman on housing Phil Twyford that restrictions on loan-to-value ratio loans might actually cool down the housing market.Phil Twyford: I would like the leave of the House to table a—Mr SPEAKER: Order! Is the member seeking to table a document?Phil Twyford: Yes. I would like the leave of the House to table an answer to a written question—Mr SPEAKER: Order! The member is now trifling with the House. Has he got a supplementary question? [Interruption] Order!Phil Twyford: When the Prime Minister told theNew ZealandHerald in June that “I don’t think it should be a tool that is used to write high LVR ratios for a bunch of rich people and lock out a whole lot of first-home buyers.” did he seek your advice first and did you tell him that you had already signed off the memorandum with the Reserve Bank without an exemption for first-home buyers making him look like a complete fool?Hon BILL ENGLISH: I think the foolish bit is well covered and will not be part of this answer. The Prime Minister was aware of the memorandum of understanding because as I recall it was announced in the Budget in front of some 120 MPs so it was not exactly a secret. The Prime Minister had some views about it and he has translated those views into changes in Government policy which mean that within the restrictions that are now applied by the Reserve Bank independently first-home buyers have a better opportunity than they would have had to get a loan.Phil Twyford: When will he admit that he has completely bungled the loan-to-value ratio negotiations and the result is that nearly 80 percent of first-home buyers now say that they have no hope of getting into their first home thanks to this Government?Hon BILL ENGLISH: The answer to the member’s first question is “Never.” Secondly first-home buyers under any set of rules are better off now than they were in 2008. In 2008 a first-home buyer had to pay a floating rate of 10.7 percent for their first mortgage. Today on average they can actually get mortgages at 5 percent less than half the rate when that Government was in power and the average is 5.8 percent. So they are better off.