Press Release – Queenstown Lakes Community Housing Trust
The Queenstown Lakes Community Housing Trust has launched a new housing bond to lower the entry level cost for first home buyers. The 5 year bond will be used to provide a new “starter loan” for eligible homebuyers in the district. A starter loan …October 13th 2011
Trust launches new housing bond
The Queenstown Lakes Community Housing Trust has launched a new housing bond to lower the entry level cost for first home buyers.
The 5 year bond will be used to provide a new “starter loan” for eligible homebuyers in the district. A starter loan will provide a 5 year fixed interest mortgage at a locked-in rate of just 5.20% – with no penalty for early exit.
The first investor take-up is Central Lakes Trust that has agreed to invest $6m into the new housing bonds for the initial pilot. The bond will offer investors a guaranteed monthly return above the government bond yield.
According to chairman of QLCHT, David Cole, “this initiative has been more than 2 years in the planning. The absence of any affordable, long dated fixed mortgages in New Zealand forces home buyers to borrow short and invest long – exposing them to the risk of interest rate movements that are often dictated by global events.”
“The culture in New Zealand towards 2 year fixed mortgages means first home buyers must sign a purchase contract never knowing how much the house might eventually cost them. This is not the case in most northern hemisphere countries where longer term fixed mortgages are readily available.”
“What is needed is an affordable, longer dated fixed rate mortgage product that restores confidence for our younger generation to take the bold step into homeownership. Starter Loans is a step in this direction.”
The Trust plans to offer 20 new starter loans at its Nerin Square development for the initial pilot.
“Ultimately we would like to expand the investor participation and extend the period to 7 years” said Cole