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Thursday 11 July 2024  Add your comment
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Westpac has cut three of its home loan terms between 10 and 25 basis points.

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Pre-approvals cancelled

[UPDATED] Many first-home buyers have had their hopes and dreams quashed by ASB's move to cancel preapprovals, outgoing Loan Market boss David Hart says.

Monday, September 23rd 2013, 1:37PM 12 Comments

by Susan Edmunds

The bank has announced it is withdrawing its preapprovals for buyers with deposits of less than 20%, from October 4.

An industry source said it was likely because the bank had overcommitted itself in the high LVR space and needed to quickly rein in lending ahead of new LVR speed limits.

He said other banks would probably follow suit.

From the beginning of next month, banks will have to keep their lending to customers with less than a 20% deposit to no more than 10% of their total loans.

An ASB spokesman said people who had been preapproved would need to reapply.

"We are encouraging affected customers to contact us to discuss their individual circumstances and how we might be able to assist them with a new pre-approved loan offer.  This may involve reviewing the amount of their current deposit and also the value of the property they are looking to purchase. We appreciate that this will be disappointing for customers who are impacted and we apologise for any inconvenience caused."

He said the move was necessary to comply with the Reserve Bank's restrictions. 

Hart said it had come as a shock. "This is going to destroy a lot of people's hopes and dreams going forward. But on the other hand, I don't blame ASB becuase they've got to get their house in order or there's a threat of losing their licence."

He said New Zealand had always worked off the basis of preapprovals and this seemed to be the beginnign of the end of that.

« It's not just home loans that maybe counted in LVR numbersFinance Minister slams ASB move »

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Comments from our readers

On 23 September 2013 at 2:12 pm D'Lance said:
Blame the dopey Nat's for red zoning 7000 properties while at least 60% + were still able to be used and easy repair. Lay the blame at Brownlee's and Key that's were it belongs.
On 23 September 2013 at 3:00 pm maureen said:
granted but that didn't cause the ridiculous situation that exists with the housing prices in Auckland..and the rest of the country is having to pay for it
On 23 September 2013 at 3:48 pm Amused said:
If we are going to blame anyone for this it should be the current Reserve Bank Governor - Dr Graeme Wheeler. These LVR restrictions are one man's “academic” solution to combat rising house prices (especially in Auckland) and the supposed risk of high ratio loans in an inflated property market.

It seems to be simply too hard for academics and bureaucrats based in Wellington to understand that non-residents and speculators are currently the biggest cause of inflated houses prices in Auckland. With a severe shortage of stock there continuing house prices will not stop increasing until the Government gets off its backside and follow Australia’s lead on this issue.

6-12 months from now property values in Auckland will not have dropped significantly (if at all) but meantime the ownership of the bulk of properties sold will now shift across to wealthy older investors and speculators and non-residents. LVR restrictions will thus do more harm than good. They are not the solution.

The rest of the country meantime goes along for the ride whilst Dr Wheeler tinkers with his macro-prudential tool kit and accomplishes absolutely nothing but denying young couples and families the opportunity of owning their own home or trading up to a larger property above 80% borrowing.

On 23 September 2013 at 3:51 pm Greame said:
Sad for a small country our policy makers haven't forecasted housing supply... It only going to shoot up the rents
On 23 September 2013 at 4:31 pm Brad said:
Pull your head in D'Lance, you'd probably blame everything on the Nats..
Blame this situation on the Baby Boomers inability to invest in anything other than property.
On 23 September 2013 at 5:27 pm Frustrated said:
Honestly, 20% deposit use to be the norm and back then we had double digit interest rates - if you don't have 20% you have no fat in your house meaning you cannot weather a bad time such as redundancy, ill health etc and are more likely to end up with a mortgagee sale - check the homes of most young couples with flash furniture new and all the mod cons - there is no making do!!! and it has and will cost them. I am looking to purchase in the Ak market and there are plenty of cheaper homes just not in the city or Devonport perhaps a first home buyer might have to buy what they can afford like I did with my first and 2nd and now can purchase hopefully something a bit better. None of this is anyone's fault it is basic economics and sense keep within your means.
On 23 September 2013 at 7:04 pm Craig Pope said:
This is extremely disappointing the bank reneging on current approvals. Surely there is a commerce commission issue selling services stating 6 months approval then pulling the pin on it.

The Reserve Bank should be more lenient given the circumstances all the banks are in with their approval pipeline. I guess you could argue when the RBNZ started making noises about restrictions the banks should have shortened approval times?
I just see a lot of quality first home buyers who have done the hard yards to save 5% being shafted not just by the RBNZ but now ASB and possibly the other banks. Lets hope patience will be a virtue.
On 23 September 2013 at 7:51 pm casey m said:
what I don't understand is why have 1st home buyers been targeted? 1st home buyers can only buy what the registered valuation is, if they want to pay more for a house they have to find the extra themselves. Its investors that up the prices of homes as they can actually pay what they want for properties.
On 24 September 2013 at 10:31 am Dirty Harry said:
@ frustrated you have some points about furniture etc. Likewise for motor vehicles - many first homies are gen Y, and have grown up with instant gratification and easy credit. They have the 50 inch telly and the 8 year old import car on credit (with negative equity), and expect to buy at 5% down without really saving up at all; which thanks to kiwisaver/welcome home loans was possible until now. But what has changed since your time is the price:income of a house and the sheer cost of living. While tellys and couches have never been cheaper; petrol, power, food and even rubbish disposal are all way more costly, wages have not grown, rents have exploded and house prices are stupid. That 20% you had to save up in the 1980s was still less $$ than 5% today and yes, it was easier to save back then.

Frankly the "back in my day" argument is overused and invalid.
On 24 September 2013 at 12:15 pm Amused said:
@ Craig Pope - None of the banks want to be enforcing these restrictions on borrowers. It's important that you remember that the Reserve Bank Governor is the architect for all of this happening in the first place.

No point then having a go at ASB Craig when they are just following what they must do by law to comply. Yes we all have customers who are affected by yesterday's news from ASB but if you are going to have a moan be accurate in where you lay the blame i.e. 2 The Terrace, Wellington.


On 24 September 2013 at 6:48 pm Craig Pope said:
@amused. No I stand by my comments and believe my 'moan' is accurate. Yes the RBNZ shoulders most of the blame. However the major banks were in constant discussions with the RBNZ and perhaps 6 months or so ago should have trimmed approvals back to 3 months rather than 6 months. Do you not think the banks could have pre planned better for this happening??
On 24 September 2013 at 10:13 pm Bert said:
Just following on the comments. The recession started with banks overcommitting with LVR ratios. U would think that they would learn before letting the people believe in the low deposits. We need strong banks to stay safe but could have approached the issue in a much kinder fashion or put these restrictions in place when the banks stopped lending because of overcommitment in 2008 rather than penalise now.

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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 - 7.14 6.79 6.65
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 - - -
SBS Bank 8.74 7.74 7.09 6.95
Lender Flt 1yr 2yr 3yr
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
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 -
Lender Flt 1yr 2yr 3yr
Westpac 8.64 ▼7.49 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼6.89 6.75 6.39
Median 8.64 7.14 6.82 6.65

Last updated: 11 July 2024 1:26pm

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