Banks call for low-deposit applications

Banks want to hear from first-home buyers with small deposits.

Monday, July 28th 2014, 12:00AM

by The Landlord

Since last year, they have had to keep their lending to borrowers with less than a 20% deposit to no more than 10% of new lending.

But they pulled back more sharply than that and many borrowers gave up even applying.

New lending to low-deposit borrowers dropped from more than 25% of new loans last August to less than 4% between January and March this year.

But Reserve Bank statistics show the tap is being slowly turned on again to people without big deposits.

The amount of new lending to high-LVR borrowers reached 8% last month. Once exempt cases under the Welcome Home Loans and construction lending were excluded, 6.7 per cent of new lending was to high-LVR borrowers, up from 5.3% in May.

ASB spokesman Shaun Drylie said banks had become more confident in their ability to measure lending and remain below the 10% threshold. There had also been an overall drop in lending in June, so the high-LVR portion represented a higher percentage. "It's two-fold, there's more confidence from the banks but also a slight drop in overall lending, given the seasonality."

He said ASB was able to approve almost all high-LVR loan applications from existing customers who met its lending criteria, and some new customers.

ANZ said it is encouraging customers to get in touch. Head of mortgages Sarah Berry said banks erred on the side of caution when the regulations were introduced. "Now there is a better understanding of how the restrictions work, and this has resulted in more inquiries from customers and incrementally more lending from banks, while staying well within the 10 per cent limit."

Westpac said it, too, was open for business. "In particular we're committed to helping first-home buyers achieve their goal of owning their own home."

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