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Decline in high LVR lending to investors

Bank lending to investors is already showing the effects of the Reserve Bank’s new loan-to-value (LVR) restrictions, which come into force at the beginning of next month.

Tuesday, October 27th 2015, 4:22PM

by Miriam Bell

From November 1, banks will be restricted in how much lending they can do to people purchasing investment properties in Auckland with less than 30% equity.

In Auckland, no more than 10% of bank lending will be able to go to borrowers with deposits of under 20% - although, around the rest of New Zealand, that limit will go up to 15%.

While the new restrictions don’t come into effect until November, in the lead-up to that date banks have been lending in the spirit of the changes.

The results of this are evident in the latest Reserve Bank lending statistics.

In September, total bank lending came in at $6.5 billion. This was up from $5.9 billion in August.

Of that lending, investors accounted for $2.24 billion, which was up from $1.99 billion in August.

However, the bulk of investor loans ($2.19 billion) were less than or equal to 80% LVR lending.

Further, the amount of lending over 70% LVR to investors dropped to $865 million in September, from $868 million in August.

The proportion of higher than 80% LVR lending to investors also dropped slightly – to $45 million in September, from $47 million in September.

Meanwhile, lending to first home buyers jumped to $700 million in September from $624 million in August.

The proportion of higher than 80% LVR lending to first home buyers also went up to $205 million in September from $182 million in August.

The biggest group of borrowers continued to be other owner-occupiers who accounted for $3.49 billion of total lending in September. This was up from $3.25 billion in August.

This data indicates that first home buyers are taking up the Government’s KiwiSaver and HomeStart incentives.

At the same time, it shows that low deposit lending to investors is increasingly limited.

The data also shows that banks are keeping well within their 10% threshold for lending to borrowers with less than 20% equity.

Just 5.8% of new loans in September fitted into that category. That’s down from 6.3% in August.

Tags: banks Mortgage Advisers RBNZ

« No cut expected for OCR Broker channel working for BNZ »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 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 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 4.30 4.20 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.45 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime - - - -
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.35 4.04 4.02 4.39

Last updated: 11 November 2019 4:01pm

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