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Warnings fly following RBNZ proposal

Frantic investor buying and increased squeeze on the rental market could be the end-result of further LVRs, investor advocates are warning.

Friday, July 8th 2016, 8:29AM

The Reserve Bank yesterday gave its strongest signal yet that investors are facing another round of targeted lending restrictions.

In a speech, deputy governor Grant Spencer said growing housing market pressures across the country mean the Reserve Bank is considering several macro-prudential policy options.

The most likely of these options is a single national LVR limit for investors which, given banks have most of the systems work in place, could potentially be introduced by the end of the year.

There was an immediate flurry of response to Spencer’s speech from across the spectrum.

Property Institute chief executive Ashley Church said it will almost certainly lead to another “frantic burst” of investor buying in an attempt to beat the end of the year deadline.

This, in turn, will further inflate house prices over the next few months.

“You’ll see big price increases and a surge in activity as investors compete with each other, on price, to squeeze that last property out of their equity before the higher level restrictions kick in.”

What’s worse is that it will all be to no purpose, Church said.

“Because the evidence of the past two years is that the LVRs have had virtually no impact on reducing house price inflation. So we’ll get a sharp increase in prices with no economic payoff at the end”.

The NZ Property Investors’ Federation believes the Reserve Bank’s proposals will just end up increasing rental prices and reducing rental supply.

NZPIF executive officer Andrew King said people are living in overcrowded conditions, in garages and cars and those people needed rental homes not rental price increases.

Ordinary people are buying rental properties because there is a huge demand from tenants, he said.

"Tenants need homes just as much as first home buyers and other owner occupiers. If you make it harder for rental property owners to provide tenants with a home, you make life harder for tenants."

Opposition politicians said the Reserve Bank was heading the ball back into the government’s court.

Labour’s Finance spokesperson Grant Robertson said the Reserve Bank has stopped asking and is now pleading with the government to take urgent action on the housing crisis.

"Labour welcomes the Reserve Bank’s indication they will bring in broader investor LVRs by the end of the year but this is only a short term solution.

“We have seen that LVRs are only a temporary band aid - they don’t fix the problem long term.

"With house prices skyrocketing by the day the government needs to take action on both supply and demand and take control of the situation.”

[READ THE FULL SPEECH HERE]

 

 

Tags: Macro Prudential Tools property investment RBNZ

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.15 4.09 4.49
ANZ Special - 3.65 3.59 3.99
ASB Bank 5.20 4.15 4.09 4.39
ASB Bank Special - 3.65 3.59 3.89
BNZ - Classic - 3.65 ▼3.54 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 - - -
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 ▼4.15 ▼4.09 ▼4.39
HSBC Premier 5.24 3.35 3.35 3.35
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.65 3.85 3.95 3.89
Kiwibank 5.80 4.30 4.34 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.59 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
Lender Flt 1yr 2yr 3yr
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.69 3.69 3.99
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 3.65 3.59 3.99
The Co-operative Bank - Standard 5.15 4.15 4.09 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 4.15 4.09 4.49
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.34 - - -
Westpac Special - 3.65 3.59 3.99
Median 5.35 4.15 4.09 4.19

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