Friday, 4 December 2009

Every bad idea is worth considering

For the New Zealand National Party, apparently. Bernard Hickey reports on the latest: having the NZ Superfund and ACC invest in the New Zealand housing market by providing long term low interest first home loans. Concludes Hickey:
It’s not going to happen, but it would be nice if the government focused on the real problems of affordability, which are not enough cheap land, high construction costs and low real wages.
Of course, first home buyers would be willing to pay more for a house if the present discounted value of the expected loan servicing costs are lower, so the price of starter homes is bid up, which then feeds through into the price of all houses, so long as there remain supply constraints.

Somebody should tell Bill English that Don Brash likes the idea so that he'll dismiss it out of hand as too radical.


  1. I especially like the bit at the end of the Herald article where a further upside was mentioned: the mortgages could be securitized.

    If only some genius thought of that particular trick befor... wait. Oh.

  2. Could then count as part of Superfund's mandated 40% local portfolio content. Ugh.

  3. Is this not the idea that Fannie Mae and Freddie Mac were born from?

  4. Would have gotten away with it if it hadn't been for you meddling kids...