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Friday 21 June 2024  Add your comment
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Customers 'will be disadvantaged'

Some businesses and householders will be adversely affected by loan-to-value restrictions, says the New Zealand Bankers Association (NZBA).

Tuesday, August 20th 2013, 3:45PM 4 Comments

by Susan Edmunds

The Reserve Bank has announced that from October 1, banks will not have more than 10% of their total loan books in mortgages to customers with equity of less than 20%.

Massey University banking expert David Tripe said that was a tighter limit than had been expected.

NZBA chief executive Kirk Hope said people needed to be aware that they might be declined loans because of the restrictions.

“While the lending restrictions will adversely affect some businesses and householders seeking low-deposit loans, our members are committed to meeting their obligations as registered banks and will comply with new lending requirements.”

He said many small businesses used the equity in their homes to raise capital and the restrictions could make that difficult.  “The lending limits may also make it more difficult for first-homebuyers and home-owners seeking a top-up loan for renovations.”

Westpac referred inquiries to the NZBA. Kiwibank said it would prioritise loan applications from first-home buyers over those from investors in the same equity position.

« LVR move stricter than predictedKiwibank moves to self-insure loans »

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Comments from our readers

On 21 August 2013 at 9:55 am Andy Holler said:
It is very obvious that the banks do no like the LVR restriction, as this is cutting into their market shares. The Reserve Bank is acting here with due diligence looking at the whole issue, where the banks, which are business entities in their own right look at this as a business restriction, especially as the mortgage business represent one of the largest business-shares for banks. However, the Reserve Banks move have far wider implications as this also looks at the household budgets where mortgage payments have reached escalating levels [in many cases over 50-60%]in proportion to the actual household income.
On 21 August 2013 at 12:50 pm Paul said:
It's all very well putting LVR restrictions in place to prevent the Auckland property market overheating. How about simultaneously putting non-resident purchaser restrictions in place too?

All that's going to happen is that NZ based 1st time buyers will be disadvantaged. The property prices won't change as demand from overseas will be unchanged. Capital Gains Tax is a neater solution.
On 21 August 2013 at 4:02 pm Amused said:
Correct Paul. Non-resident purchaser restrictions would be the best solution in Auckland to make a "real" difference to house prices there. Most intelligent people would agree with you. Sadly the Reserve Bank thinks otherwise primarily because they are relying on REINZ statistics which show only a very small portion of purchasers in Auckland are not NZ citizens. These stats are absolutely false. No prize for guessing why land agents would want to purposely fudge this data. I know several land agents in Auckland who simply smile and grin at me whenever I raise this subject with them.

The Government seems unwilling to address the issue of foreign buyers inflating the value of Auckland property prices. Until they do Kiwis (existing homeowners or 1st home buyers) will keep missing out to overseas purchasers at auction who have plenty of cash and don't even need a mortgage. Meantime the Reserve Bank is now practically saying to all wealthy overseas investors go buy 10 properties in Auckland and become a very wealthy landlord renting out housing to Kiwis in their own country. Well done Dr Wheeler!
On 22 August 2013 at 10:18 am CJM said:
NZ is running a large balance of payments deficit. That is funded either by borrowing money (and providing collateral) or selling assets to foreigners.

If we don't sell them houses (or allow houses to be used as collateral since they can never own them), we have to sell them something else.

Of course, if we stopped running balance of payments deficits, we would not have to sell off assets. But alas, NZers seem to want to buy things they can't afford. Houses being a large part of that.

This is the problem with economics - everything is inter-related.

Tackling a problem in the most obvious way often has unintended consequences elsewhere, and is often not the real solution. I suspect Wheeler understands this.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼6.99 ▼6.49 ▼6.29
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.09 6.95
SBS Bank Special - 7.14 6.49 6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 20 June 2024 10:39am

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