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Big drop in investor lending

New tax and loan-to-value (LVR) ratios seem to have significantly dented bank lending to investors.

Thursday, November 26th 2015, 6:00AM

by Miriam Bell

The Government’s new tax measures, which are aimed at both local and overseas investors, came into force on October 1.

Meanwhile, from November 1, banks have been 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 can now go to borrowers with deposits of under 20% - although, around the rest of New Zealand, that limit has gone up to 15%.

As instructed by the Reserve Bank, banks started lending “in the spirit” of the new restrictions a couple of months prior to them coming into force.

Debate continues to rage over what the long-term impact of the new measures might be, but the latest Reserve Bank lending statistics indicate lending to investors has taken a hit.

In October, total bank lending came in at $5.8 billion, which was down from $6.5 billion in September.

Investors accounted for $1.7 billion of total lending. This figure was significantly down on the $2.24 billion they received in September.

Of that investor lending, $1.1 billion was less than or equal to 70% LVR lending, while $549 million was higher than 70% LVR lending.

The amount of higher than 70% LVR lending dropped significantly from September when investors accounted for $865 million.

In the higher than 80% LVR lending category, the amount that went to investors halved: it dropped from $45 million to $25 million.

At the same time, in October, higher than 80% LVR lending to both first home buyers and other owner-occupiers increased.

First home buyers accounted for $215 million, which was up from $205 million in September.

Other owner-occupiers – who, once again, were the biggest group of borrowers in the total lending pool – accounted for $236 million, which was up from $204 million.

The data also shows that banks have continued to stay within their 10% threshold for lending to borrowers with less than 20% equity.

Just 6.9% of new loans in October fitted into that category. However, that figure was up from 5.8% in September.

Tags: banks RBNZ

« The Co-operative Bank looks longNew normal threatens RBNZ tactics »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 3.95 4.15 4.49
ANZ Special - 3.45 3.65 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - 3.49 3.55 3.89
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
Lender Flt 1yr 2yr 3yr
China Construction Bank Special - 3.19 3.19 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
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 4.65 4.80 -
HSBC Premier 5.24 3.54 ▼3.20 3.69
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.97 4.05 4.39
Kiwibank 5.15 4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.45 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Lender Flt 1yr 2yr 3yr
Pepper Money Near Prime 5.64 - 5.44 5.44
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.45 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.39 3.55 3.89
Sovereign 5.30 3.89 4.05 4.39
Sovereign Special - 3.39 3.55 3.89
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
Lender Flt 1yr 2yr 3yr
TSB Bank 6.09 4.19 4.35 4.69
TSB Special 5.29 3.39 3.55 3.89
Wairarapa Building Society 5.50 3.95 4.05 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.55 3.99
Median 5.34 3.96 4.09 4.39

Last updated: 14 February 2020 10:02am

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