New Zealand passes solar tipping point(rnz.co.nz)
rnz.co.nz
New Zealand passes solar tipping point
https://www.rnz.co.nz/news/business/594242/new-zealand-passes-solar-tipping-point
9 comments
"only about 20 percent of households had access to green loans from banks to do so, because they often require sufficient equity in a house and for the homeowner to have an active mortgage."
I get the equity requirement. But why an active mortgage?
I get the equity requirement. But why an active mortgage?
> why an active mortgage
The banks make very low profits on 0% interest (government subsidised green) loans with a max total lending limit of NZD50k and many approvals might be less than $10k. The loan needs to use the home as collateral.
It wouldn't be cost effective (for bank or lender) to originate a new loan: instead the green loan uses the paperwork from an existing loan.
The bank can use the existing mortgage's legal paperwork to attach the new debt to the lender's house for collateral.
Approval, legal, and eligibility costs are reduced because an active loan has already been approved. The bank mostly wants to check that the lender's likelihood of repayment hasn't drastically worsened (e.g. lost their job).
The banks make very low profits on 0% interest (government subsidised green) loans with a max total lending limit of NZD50k and many approvals might be less than $10k. The loan needs to use the home as collateral.
It wouldn't be cost effective (for bank or lender) to originate a new loan: instead the green loan uses the paperwork from an existing loan.
The bank can use the existing mortgage's legal paperwork to attach the new debt to the lender's house for collateral.
Approval, legal, and eligibility costs are reduced because an active loan has already been approved. The bank mostly wants to check that the lender's likelihood of repayment hasn't drastically worsened (e.g. lost their job).
Add a loan fee and be done with it?
my guess is that the loans are not profitable for the banks - and the banks don't really want to manage these loans - many of which might be just a few thousand dollars.
Because it is a government program it is likely the banks don't want to be seen (by lenders or the government) as making a profit (even if they were just trying to cover costs).
Program restrictions likely prevent banks from using fees to make a "profit" since 0% interest doesn't leave much room for banks to make money.
I assume the government funds the loans and I assume the government doesn't underwrite the liability. I would guess the funding is limited and the government is very tight, restricting any potential profit for the bank.
You'd need to look at the government documentation.
Because it is a government program it is likely the banks don't want to be seen (by lenders or the government) as making a profit (even if they were just trying to cover costs).
Program restrictions likely prevent banks from using fees to make a "profit" since 0% interest doesn't leave much room for banks to make money.
I assume the government funds the loans and I assume the government doesn't underwrite the liability. I would guess the funding is limited and the government is very tight, restricting any potential profit for the bank.
You'd need to look at the government documentation.
I think the idea is that if you don’t have an active mortgage then you have a lot more money available than someone with a mortgage, so money isn’t as much of a barrier for those people to put up the panels.
I don't get the active mortgage requirement either and I live in NZ.
Tim Sparks, at the Electricity Authority!?
The Energy Minister was, until recently, Simon Watts.
And for comparison, power in Australia was always about 2x more expensive, while solar was about 2x cheaper. That's a 4x worse payback period in NZ!
> He said it was cheaper to put solar on houses than build solar farms
How?