Brokers concerned about LVR restrictions
Mortgage brokers in regional New Zealand are particularly concerned about the impact of loan-to-value restrictions on their clients, the PAA says.
Monday, July 22nd 2013, 9:28AM 
5 Comments
by Susan Edmunds
Reserve Bank governor Graeme Wheeler has indicated that he wants LVR restrictions as a way to shore up stability and take the heat out of the housing market.
The introduction of “speed limits” to curb the amount of lending banks do to customers with small deposits is likely soon. There have been reports an announcement may be made as early as next month.
PAA general manager Jenny Campbell said brokers outside Auckland were particularly worried about how that would affect their clients.
The organisation has made a submission to the Reserve Bank, asking it not to make it harder for first-home buyers to purchase properties. “Regional brokers wanted us to take a strong position.”
While Auckland’s property prices are rising strongly, most other regions’ prices are only increasing slowly.
The introduction of across-the-board restrictions, as Wheeler has suggested, could take the wind out of regional economies that were still struggling. Campbell said: “All you ever hear about is the Auckland property market but it’s still quite difficult to get high-LVR lending in the regions. This would make it even more difficult.”
Campbell said there was no evidence that high LVR loans were easy to get or that those borrowers were any more likely to default. Borrowers who were not able to get high-LVR loans would likely go to second-tier lenders, she said.
Campbell said servicing ability was more important than the size of a deposit when banks were considering whether to lend to borrowers. “We’re still a long way from the days of 100% lending. It is actually quite difficult to get a high LVR loan.”
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Comments from our readers
Until the Government actually bans foreign ownership of domestic housing nothing the Reserve Bank is proposing will impact the slightest on property prices in Auckland. First home buyers are not the cause of Auckland's problems! The issue is the foreign buyers (mainly from China) who are paying cash in the Auckland auction rooms around the suburbs currently. Anyone who is trying to buy a house in Auckland already knows this fact. The Reserve Bank however seems totally ignorant to the above.
Help small business in regional areas to create jobs and get people moving out of city for a better life.
Timber mills , dairy factories, horticulture, viticulture, sea food farms, {Places that supply higher numbers of jobs to small economies/towns. They should get a massive tax break and insentives to hire staff on good structured business plans that create growth.
In australia my wife was a home finance manager for westpac and each post code has a different LVR. Some as high as 40% in mining areas [high risk] .Each post code has been carefully risk analysed for risk.
Now that the zoning change in auckland is underway alot of auzzie developers will get wind and dominate the high density as they are experienced at this unlike the kiwis, except a few good high profiles that are now bankrupt.These type of high rise projects take a high level of experience and have thousands of pages of documents just to get the project off the ground . Then the construction project management is another level. If its not done efficiently to set time frames and with shire processing time frame limits projects costs will blow out and become a city of scattered skeletons. Auckland council has a lot of work to do also.
Wheeler as the puppeteer, be careful what string you pull, The gravitational flow might just be a yoyo.
Get out of town, the simple life with family for less money with an abundance of nature can lead some to fufillment
www.ruatapu.com
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