Parliament Caught Telling Porkies
On 24th March 2020, the New Zealand Parliament passed a motion to give Kiwis a Mortgage Holiday for 6-months because of the COVID-19 situation and nationwide closures.
How nice.
The country went wild with appreciation. The Prime Minister, in full elation (seeing that this is an election year).
But what REALLY is this Mortgage HOLIDAY all about?
Let's talk to the Bank of New Zealand (BNZ) and find out...
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Homeowner: My mortgage payments are $495 per week.
So for the next 6 months, I don't have to pay for this and it is a free holiday?
BNZ: No, no, no, no, no. Not free. If you take advantage of this mortgage holiday we will still be charging you INTEREST for those 6 months.
Homeowner: So what is that going to cost me?
BNZ: At your interest rate of 3% on your mortgage balance of $300,000 that will add an additional $4,500 to your home mortgage and add 6-months to your mortgage term.
Homeowner: How about your "interest-only" payment plan?
BNZ: You would have to pay $750 per month for the 6 months and it will also add $7,380 to the balance of your mortgage which you will have to pay at the end of your term or we can finance that for you.
[Note: BNZ Customer Service refused to answer any questions about this even though this person has a mortgage with them. They kept on trying to force the person to APPLY for the Mortgage Holiday. All of these figures have been worked out based on BNZ's documentation.]
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This is definitely not a Mortgage Holiday.
Really Big Numbers
According to the Ministry of Statistics, the total amount of home mortgages held by banks for New Zealand properties is about $275 Billion (as of November 2019).
So, let's do some math...
Let's use a basic interest rate of 3% for this example.
3% of $275 Billion is $8,250,000,000 (or $8.25 Billion).
That is for 1-year of interest.
So 6-months of that would be $4.125 Billion.
In doing this wonderful, awe-inspiring, selfless act to help preserve the Kiwi way of life...the banks are making an ADDITIONAL $4.125 Billion in interest.
I bet that didn't take too much convincing.
So, What Could Have Parliament Done Instead?
Nearly two weeks before Parliament voted on the "Feed the Banks Some More Pork" scheme, a little-known Transparency Foundation (TF) wrote 'An Open Letter to the Prime Minister'. A copy of this letter was delivered to each and every Member of Parliament including the Prime Minister.
The Letter outlined the reality of what closing the country would do to the people of New Zealand and especially the small-business owners, homeowners, and farmers.
TF also issued a very workable solution: PAUSE All Payments and Interest including mortgages, rents, credit cards, taxes, etc., then restore them once the health danger had lifted.
All the solution that Parliament enacted achieves is:
- Create more debt for homeowners.
- Feeding more pork to the banks.
Parliament's solution does NOTHING for small businesses and farmers. The personal and employee subsidies do nothing to pay equipment leases, vehicle leases, or rent on now-vacant shops.
In fact, many small businesses are barely able to pay their rent now. The longer we are in the closure, the more businesses will go bankrupt.
Parliament's solution only helps create the illusion that help has been dealt -- in hopes that the public will be swayed to keep Labour in power come the September elections.
NOT A CHANCE IN HADES.
Research & Investigation
Something can be done about this. Click on the TF website link, read the solution, then call your MP.
Transparency Foundation website:
UPDATE:
As a few of our readers correctly noticed, the words 'MORTGAGE HOLIDAY' are actually a bank product.
It seems that Parliament has 'sold us' a bill of goods, making it look like they actually did something when in fact they have done nothing at all. How deceptive.
Labour and New Zealand First need to go.