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Reserve Bank defers decision which will hit property investors

The Reserve Bank today published its summary of submissions relating to proposed changes to bank capital adequacy requirements for housing loans. It includes proposed changes that have potential to hit property investors with increased interest costs.

Friday, June 13th 2014, 12:00AM

by The Landlord

BS2B Section 4.7(a) says that a bank will not be able to classify a loan as a residential mortgage loan (in retail asset class) if it is aware that the borrower owns more than five properties that it gains rental income from.

These loans are to be classified in the SME retail or corporate asset class.

Surprisingly there were only nine submissions, six were from banks, two from representative organisations and one was a private submission.

The Reserve Bank summary  included the argument that “ by not being in the retail asset class, customers would have to be managed on an individual basis which required the bank to obtain more detailed information. That and the higher risk weights could lead to a higher pricing of those loans.”

The two submissions from parties involved in property investment activity also highlighted concerns about the potential for an increase in the cost of residential property loans for investors with five or more properties.

Most of the arguments raised however were around the technical difficulties banks would have in implementing the rule.

The Reserve Bank has consequently decided to “ postpone the implementation of the capital treatment of customers who own and let out multiple properties  i.e. property investors, until December 2014.” Originally the changes were timetabled to come into force from 1 July 14.

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ANZ 5.19 4.15 ▼4.04 4.49
ANZ Special - 3.65 ▼3.54 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 ▼3.49 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
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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 ▼3.89
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
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Westpac - Offset 5.34 - - -
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Median 5.35 4.15 4.09 4.19

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