Brake comes off low-deposit lending
Things are looking up for borrowers with small deposits, as mainstream banks indicate they are getting back into the market.
Friday, January 10th 2014, 12:20PM 
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by Susan Edmunds
The banks pulled back sharply on low-equity lending before Christmas. Less than 6% of new loans in November were to borrowers with a deposit of less than 20%.
Since October, banks have been able to lend no more than one in 10 of their new loans to borrowers with a small deposit.
David Windler, of the Mortgage Supply Co, said banks had stopped almost all sub-20% lending at the end of last year. “They had so much in the pipeline that they had to.”
But he said it had started to look like banks were getting to grips with the new rules and were relaxing their criteria.
ASB had been in touch with several brokers to let them know that $40 million had been made available for lending above 80%, he said.
But the loans had to be documented by the end of January and drawn down within 60 days after that. There had to be a sale and purchase agreement already signed.
Windler said he took that to mean that ASB was confident it could meet the Reserve Bank’s criteria over the next three months.
“They’ve kept it quiet and have only talked to select brokers, and they’re not putting anything in writing,” he said.
Westpac and ANZ had also indicated they were willing to look at borrowers who had less than 20%.
Windler said demand had quietened substantially because people thought it was not worth even inquiring.
“But people have to pick up the phone and make inquiries. There are so many ways it can be done now, through Welcome Home Loans, by building, using non-bank lenders or by being a strong borrower.”
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