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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

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.95 3.29
ANZ 4.44 3.10 3.50 3.84
ANZ Blueprint to Build 1.68 - - -
ANZ Special - 2.50 2.90 3.24
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.55 2.95 3.29
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.55 2.95 3.25
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 3.15 3.22 3.85
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 1.95 1.85 2.35 2.45
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 ▲2.29 ▲2.69 ▲2.99
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 3.34 3.34 4.14
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 2.49 2.49 3.29
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 2.69 2.99 3.29
SBS Bank Special - 2.19 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.29 - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.89 3.19
The Co-operative Bank - Standard 4.40 2.99 3.39 3.69
TSB Bank 5.34 3.30 3.69 4.04
TSB Special 4.54 2.50 2.89 3.24
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 3.15 3.49 3.89
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.89 3.29
Median 4.54 2.68 2.99 3.29

Last updated: 29 July 2021 9:04am

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