Banks are tightening their lending criteria making it even more difficult, especially for property investors to get their loans approved.
One, highly experienced Auckland broker described the ANZ’s move as "pretty big changes”.
“ANZ won’t do much lending in Auckland off the back of these changes as they’ll be too tricky to deal with relative to other banks.”
In one change the maximum LVR on Auckland owner/occupier lending, has been reduced to 85%. Once LEP fees are included the LVR maximum is really about 83%
The reality in dollar terms is that a 15% deposit in Auckland will mean at least $100,000.
“This will be really tough for the lower end of the market. It means we’ll be using guarantors more and opens up options with non-banks,” one adviser says.
The maximum LVR outside Auckland is now 90%, which, when LEP fees are included is really 87%.
ANZ is also removing the Combined Collateral Exemption and limiting the LVR to 70% if any investment property is included.
Previously a borrower could still leverage up to 80% on the owner/occupied property, and 70% on any investment lending. Now if there is any investment lending, the maximum LVR is 70%.
Going to 70% overall will severely limit property investment with ANZ.
One change has been described by Kris Pedersen as counter to what the Reserve Bank and the Government are trying to achieve.
Under the changes ANZ will no longer lend on bare land to investors. This means no funding for land banking or spec building. Also there will be no lending on apartments ‘off the plans’ to investors.
This tightening cycle will make life a little more complicated for everyone, but again, it shows the importance of using a spread of lenders, and diversifying property portfolios through multiple lenders.
A number of mortgage advisers suggested the changes were being made to try and dissuade the Reserve Bank from introducing debt to income ratios.
“It will be interesting to see what other banks do and if the RBNZ is influencing this through closed door conversations with lenders. I think they are,” one said.
Mortgage Supply Company chief executive Jenny Campbell said; “These changes are actually quite drastic, and go further than the current Reserve Bank speed limits.
“To us, this seems the ANZ may be trying pre-empting further macro prudential measures, by voluntarily pulling back their lending. We have heard whispers that they also might be tightening up on how they currently treat overseas income, and clients with earnings offshore may find lending much more difficult to secure.”
ANZ would only provide email comments on the changes. It said: “We routinely fine-tune our lending rules to take account of current market conditions.”
“As a responsible lender we want to make sure people are in a position to comfortably repay their home loans.
“The price of Auckland’s houses is the result of more demand than supply. Until that is addressed the prices of Auckland houses will continue to be high.
“We’re committed to helping Kiwis into their homes and we will continue to assist customers with their plans for home ownership.”
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