Broker calls for new-house exemption
New houses, which add to Auckland’s housing supply, should have been exempt from the LVR restrictions, a broker who specialises in construction finance says.
Friday, November 1st 2013, 12:00AM
by Susan Edmunds
There are reports that new home builds have been hard hit by the restrictions, which came into force last month.
Banks must keep their low-deposit lending to no more than 10% of new loans.
GJ Gardner told the NZ Herald it had lost 24 new-home projects in the first month of the restrictions alone, and more deals would likely disappear.
Ian Webb, who is on the board of the PAA and runs NewBuild, which helps clients find finance for construction products, said the Reserve Bank had provided no justification for not exempting “supply side” lending.
“The loss of single building consent should have been sufficient reason to avoid restricting the supply side lending.”
He said banks were already notoriously disinterested in lower deposit construction loans. By exempting them, it could have made a significant step towards adding to Auckland's housing supply.
“If the RBNZ were to exempt low deposit lending for supply side lending, not only would it get the 3000-plus units back on stream, it would be a strong motivator for the banks to find solutions to help their customers into the residential construction loan market, providing a double positive to the Reserve Bank, the government and the local authorities desperate to increase supply.”
Webb said the number of people affected by the rule change would continue to increase as people opted to stay put, rather than to sell their properties and build new, out of fear they would not get another mortgage.
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