Reserve Bank finally convinces politicians to support debt-to-income restrictions for home loan borrowers after years of lobbying

Agree. Interest deductibility was a game changer. Our friends who own rentals have said they will pay no tax on rental income because interest cost suck up any profit. It also shows you that measures to reduce investor demand can bring down house prices.

And FHBs are now the largest buying group with OOs and rentiers behind them. 

I wonder whether interest deductibility will get back to 100%. The first move is to 80%?

There are good economic and tax fairness reasons for keeping it less than 100%.

Both rentiers and OOs get an economic benefit to owning a house. (e.g. OO don't have to pay rent but there's a bit more to it than that. Anyway ...)

At 100% deductibility, the rentier gets a slightly greater economic benefit than the OO. Thus somewhat less than 100% deductibility balances this out. Where it doesn't balance out is that increased demand from the rentiers pushes prices up, so even less again is warranted. 

Overseas, other tax regimes have less than 100% deductibility and/or give tax breaks on interest paid to OOs to even things up.

NZ (is anyone surprised) is way behind the rest of the world in balancing this up.

"Removing interest deductibility was a nuclear bomb for highly leveraged property speculators, it was already causing large disruptions as it was being phased in at 25% and then 50% currently. If it was going to hit 100% removal as intended, I think that would have indeed been a back breaker  event for property speculators"



The policy setting of equalising tax treatment of interest for non owner occupier buyers with occupier buyers in the existing house market needed more time to work. 



Do we as a society want to see more owner occupier owners or more non owner occupier owners who are speculating for non taxable capital gains? There are other non financial benefits of increased home ownership by owner occupiers.



Many non owner occupiers have a goal of owning 10 residential properties - let them own 10 residential properties by building them all, rather than competing and frequently outbidding owner occupier buyers in the existing residential property market.  The policy settings of the previous government incentivised that for non owner occupiers. 



The policy settings of 100% interest deductibility for purchasing properties in the existing residential property market has resulted in the lowest levels of home ownership by owner occupiers in decades in NZ.



https://tradingeconomics.com/new-zealand/home-ownership-rate



 

Exactly.

So many pundits ignore actual data.

Healthcare systems are near the end of the energy surplus industries.  We can afford to have very good ones when we have energy surplus, to take care of aged/sick people.  As energy surplus dwindles per person, so will healthcare systems, forcing us to have health care systems which will be a shadow of their former selves and focussed only on critical care.  PDK talks about triaging, healthcare of course is where the term comes from, dealing with the most dire needs first and if there are resources left over, dealing with others after. This will be felt in us developed countries first as healthcare only becomes affordable for the wealthy, services start failing in small ways first (we are here, so is the UK), then in bigger and bigger ways as resource competition really kicks in. 

Here are the actual facts according to Forbes Study.  I would conclude that likely more Kiwis skip seeing a Doctor due to costs than is the case in the US

Health Insurance Statistics

·  An estimated 8.4% or 27.6 million American adults didn’t have healthcare coverage at some point in 2022. ^[1]

  Healthcare expenditures per capita averaged $10,191 in the U.S. in 2020.^[2]

·  Total national healthcare expenditures reached $4.3 trillion in 2021, slightly higher than in 2020, when expenditures totaled $4.1 trillion, and significantly higher than pre-pandemic healthcare expenditures which totaled $3.8 trillion in 2019.^[4]

·  Hispanic and Black working-age adults were less likely to have healthcare coverage than White/Non-Hispanic or Asian adults in 2022.^[3]

·  United States health insurance statistics show that Americans are worried about how much health insurance costs and being able to afford healthcare. Of the expenses adults are most concerned about affording, medical bills ranked second to gasoline and/or transportation expenses.^[2]

·  Cost is preventing people from getting care—8.7% of adults reported not seeing a doctor in 2021 because of the expense.^[2]·

·  Preferred provider organizations (PPOs) are the most common type of health plan for covered workers, followed by high deductible health plans (HDHPs).^[2]

·  The top three leading causes of death in 2021 were heart disease, cancer and Covid-19.

Actually it is facts, directly taken from stats NZ. But I guess we can discount certain classes of people from existence to suit your world view if they are poor enough. The DTIs have been incredibly harmful to get housing for young poor families to live in but it has made it easier to borrow for investment properties which produce income for those already with housing. Even today it is much harder for those on median incomes to borrow for housing in the cities in which they work. The banks often implement rules that are harsher than the government of the day advertises they originally intended.  Kiwibuild was designed from the outset to be inaccessible and unaffordable. There was always a fairytale of marketing around it though for the lucky winners.

How many of these are preventable through lifestyle? None. None of those are causes of death. But then fun fact all your "preventable through lifestyle" things should have adequate medical health treatment e.g. a person with an untreated eating disorder still needs medical support and treatment to recover from an eating disorder. Obesity is a symptom caused by many conditions: thyroid, hormonal imbalance due to cysts & cancer, cancer growths, ascites, autoimmune, organ diseases, eating disorders etc. Drug use is an addiction which already is known to need medical support and intervention, none of which is widely available to over 25% of the population. Ever tried to get a placement for suicidal family these days in a crisis center or addiction support, or eating disorder support? How about medical treatment for non RRMS? We know mental health support is in the crapper and getting worse in NZ but your ignorance and assumptions only go to prove why that is still the case. Also fun fact more people die young and in a shorter space of time from being medically underweight due to eating disorders than the reverse. We really do need more funding to stop deaths of those with eating disorders underweight which is far more harmful to the internal organs in the short term. Sadly many do die from organ failures and diseases which affect organ function. Do we have data for this, yes we do. 

Also fun fact a preventable death from a treatable condition above the age of 65 is still a preventable death from a treatable condition. We don't cut off medical care to those over 65 by default no matter how much you want a Logan's Run style society where we can just ignore & neglect everyone over 65. But sure lets call all deaths over 65 "natural" does that make you feel better that you can die from neglect & sepsis simply because you could not access the medical care to treat it but most society will ignore that injustice because you are seen as being old and should be dead? Turn the tables how would you feel if that bias was instead applied on income basis lines (like we have today) or racial lines (like we have today) on gender lines (like we have today) or ability and access lines (like we have today). All data recorded and proven by Stats NZ, Te Whatu Ora, & reported on through NZ doctors. Sure lets just ignore the body of evidence from medical professionals, that always goes well.

Eh, that's okay I guess. But in my day 24 could have a house already with a small mortgage and without much financial stress. 

It's nice that we can pretend that mathematics are irrelevant and that it was only ever hard work that got people ahead, but that's obviously just pretend. Older generations benefited from affordable housing previous generations' policy and taxes created, and now benefit from younger generations' provisions for them too. So many of them still find it easy to whine on talkback radio, too.

The effects of DTIs are overstated and seem no different to what we currently have. Adrian still lives in the 1980s or early 2000s wild west. 

I guess it could be a net benefit to investors buying their first property or two, thanks to the higher proposed DTIs.

Once you go beyond that, your non-property income gets stretched thinner and thinner. A DTI of 7 means a maximum loan of about 40% on a new property unless supported by outside income.

"The unintended consequences of DTIs are terrible for NZ as a whole."





However the intended consequences of DTIs are critical for NZ as a whole - i.e financial stability of the banking system.



The short and long term consequences of financial instability and loss of confidence in the banking system have been shown in history.  



Financial stability of the banking system for the vast majority of the population should have a higher priority over easing access to credit for a small proportion of the population ( i.e highly leveraged borrowers).

Certain groups have chosen to politicise DTI measures for their own vested financial or political interests. 



 

The intended and unintended consequences of the present and recent decades policy have been terrible for NZ as a whole. Some who benefited from it perhaps think they can protect themselves and their families from the consequences of it with the wealth they've hoarded, but that seems unrealistic. We still have to live in the society we've created. Unless you emigrate.

So it follows investors should find it easier to borrow? I beg to differ. Most young people I know not in their own homes are just as hard working as previous generations. The ones I know who do own often had parents gift them huge sums to get onto the property ladder. Certainly not entirely on their own. Sheer dumb luck does not make them any harder working. My parents never bought a house so were in no position to help. It’s earning well over 150k that made it possible. That shouldn’t be what it takes to do it without breaking your back.

This looks out of touch with anything but talkback radio, and certainly with reality.