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Banks hit LVR brakes

Banks are closing the door on low-equity Auckland property investors, even before the Reserve Bank rules kick in.

Tuesday, July 21st 2015, 6:00AM

by Susan Edmunds

From October, Auckland investors will need 30% equity for every new loan. But some banks are acting early. 

ASB last week announced it would no longer issue preapproved mortgages for property investors in Auckland with less than 30% equity. Existing preapprovals will be honoured provided the deal settles by October 1.

Auckland mortgage broker Christine Lockie said it had come as a shock.

“I have one client who lodged three days ago, but because of bank backlogs, he does not qualify – I’m fighting it because he is in the middle of a negotiation...It is a bit unfair on those trying to beat the Reserve Bank’s rules. It closes out anybody wanting pre-approval to purchase an investment property in Auckland with less than 30% equity.”

She said it would only hurt “mum and dad” investors and those getting started in the market. “The major property investors, people who own multiple properties, will not be affected because they will generally have the necessary equity anyway. In effect it hurts a tried and true retirement strategy for many Kiwis.”

ASB spokeswoman Nicole O’Brien said the bank had been asked by the Reserve Bank to act in the spirit of the changes ahead of October 1.

“What this means in practice is that, from July 16, all new applications (including pre-approvals) which involve lending on Auckland residential investment properties will now be assessed on a case-by-case basis to ensure we comply with the spirit of the RBNZ changes."

Kiwibank now includes a clause in its preapproval letters saying that if lending has less than 30% equity in Auckland the bank may not be able to complete the loan.

A BNZ spokeswoman said: "BNZ is working towards getting operationally ready with regards to the new loan-to-value regulations for property investors announced by the Reserve Bank earlier this year. Within the letter and the spirit of the new regulations, BNZ will continue to support property investors, while being a responsible lender and ensuring that they have the ability to meet their repayments. We're working with these customers to ensure that we aren't issuing pre-approvals that won't comply with the Reserve Bank's new requirements from October 1."

Westpac said it was still issuing preapprovals valid until September 30.

Tags: Macro Prudential Tools Mortgage Advisers

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.19 4.25 4.49
ANZ Special - 3.69 3.75 3.99
ASB Bank 5.20 ▼4.25 ▼4.19 ▼4.39
ASB Bank Special - ▼3.75 ▼3.69 ▼3.89
BNZ - Classic - ▼3.69 3.75 ▼3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 ▼4.45 ▼4.35 ▼4.55
BNZ - TotalMoney 5.30 - - -
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
Housing NZ Corp ▼5.19 ▼4.29 ▼4.29 ▲4.49
HSBC Premier 5.89 3.79 3.79 3.89
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.65 3.85 3.95 3.89
Kiwibank 5.80 ▼4.30 ▼4.40 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.55 ▼3.65 3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.69 4.79 -
Resimac 5.30 4.86 4.14 4.19
RESIMAC Special - - - -
SBS Bank ▼5.29 4.85 5.05 5.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 3.78 3.78 3.99
Sovereign ▼5.30 4.35 4.29 4.55
Sovereign Special - 3.85 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.79 3.84 3.99
The Co-operative Bank - Standard 5.15 4.29 4.34 4.49
TSB Bank ▲6.09 ▲4.65 ▲4.59 ▲4.85
TSB Special 5.29 ▼3.85 ▼3.79 4.05
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.69 4.79 5.19
Westpac - Offset 5.34 - - -
Westpac Special - ▼3.69 ▼3.75 ▼3.99
Median 5.50 4.29 4.25 4.19

Last updated: 16 August 2019 8:50am

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