Housing Corporation Selling Mortgages

The Government has announced that Housing Corporation of New Zealand (HCNZ) is selling mortgages held by about 8,000 clients to a WestpacTrust subsidiary for approximately $180.5M.

Finance Minister Rt Hon Bill Birch and the Minister Responsible for Housing Corporation Hon Murray McCully said the mortgages would be sold for book value to The Home Mortgage Company.

The Ministers said it did not make sense for the Government to own prime rate mortgages when these mortgage holders could receive at least the same service or better from commercial banks and other institutions.

They said the new owner would be a financial institution that could offer its newly acquired mortgage holders a greater range of associated banking and savings products than they could access through HCNZ.

The Home Mortgage Company bought the last batch of mortgages sold by HCNZ in June 1996.

The Ministers said HCNZ would continue to cater for groups who had difficulty gaining access to housing finance from the private sector, such as owners of multiply-owned land and state housing tenants wanting to purchase their homes under the Government's Right to Buy programme.

HCNZ currently has staff of around 45 at its national office in Manukau City and at its small policy office in Wellington. Some staff will be recruited to assist The Home Mortgage Company with the newly purchased mortgages and other HCNZ staff will be needed to run the remaining functions of the Corporation.