New Zealand Prime Minister John Key said limits on low-deposit home loans are something buyers have to tolerate if the nation wants to avoid faster interest-rate increases

October 1, 2013 Leave a comment

Key Says N.Z. Loan Limits are Medicine Economy Needs to Swallow

New Zealand Prime Minister John Key said limits on low-deposit home loans are something buyers have to tolerate if the nation wants to avoid faster interest-rate increases. “Like all medicines, I don’t necessarily like having to swallow it either,” Key told TV3’s Firstline. “But what is the best thing overall for the economy?” From today, banks face restrictions on the amount of new home loans they can make when the deposit is less than 20 percent of a property’s value. The nation’s central bank, concerned a housing bubble is threatening financial stability, imposed the limit because raising interest rates might boost the currency and hurt the economy. Opponents of the loan limits “are telling you they want you to pay more for your mortgage,” Key said. “I want lower interest rates.” Reserve Bank Governor Graeme Wheeler said Sept. 12 that the limits lower the bank’s projection for 90-day bank bill yields by 30 basis points, or 0.3 percentage points. Still, he said the central bank will have to start raising rates next year. It expects yields to rise by 100 basis points by the end of 2014.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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