Call to split interest rates

Olly Newland has been a vocal critic of the LVR rules, which came into effect in October. Banks must lend no more than one in 10 of their new loans to buyers with a deposit of less than 20%.

They are designed to tackle potential financial instability caused by rising house prices.

In November, banks lent less than 6% of their new loans to low-deposit borrowers.

Newland said it was a bad move by the Reserve Bank, and was taking a huge chunk of buyers out of the market.

He said it would be better to introduce a system where investors paid higher interest rates.

“If you’re going to have something, it makes more sense. If you’re buying an investment property, you can do the numbers. I don’t think they thought [the LVR rules] through.”

More pressure was mounting on the rental property market, he said, as would-be buyers were stuck as tenants for longer.

“The market has to flow smoothly, you can’t take chunks out. If the Government wants affordable houses, the Reserve Bank has taken a third of those buyers away. The first-home buyers of affordable homes don’t have hundreds of thousands of dollars in their pockets.”

Comments from our readers

On 8 January 2014 at 9:27 am Lewis said:

Great, let's cripple the industry, when the excessive demand comes from the consumer side. People hate renting when they're young, which leads to people having a bad taste in their mouths when people talk about landlords... But don't forget that this is an industry in itself!

On 14 January 2014 at 5:21 pm john said:

This suggestion is plain silly.
1) How can you tell an investor from an occupier e.g. you may change you use of the property and who is going to police that.
2) A professional investor doing so to gain income from rent is doing a service. In contrast many owners in the more affluent suburbs/properties increase their mortgage for extras such as swimming pools. Is it sensible to 'encourage' this with lower interest rates?

Call to split interest rates

A two-tier interest rate system, with higher rates for investors, would be a better option than loan-to-value restrictions, one commentator says.

Tuesday, January 7th 2014, 12:00AM 2 Comments

Comments from our readers

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