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More investor lending restrictions looming

New lending restrictions targeting investors are likely to be introduced before debt-to-income ratios, the Reserve Bank has said.

Thursday, June 9th 2016, 1:58PM

by Miriam Bell

Reserve Bank Governor Graeme Wheeler

The Reserve Bank kept the OCR on hold at 2.25% today but, once again, expressed its concern over the financial stability risk posed by the country’s hot housing market.

It said that property investors are responsible for 46% of lending in Auckland and about 40% around the rest of New Zealand.

This was adding pressure to the market and, for this reason, the Reserve Bank is doing analytical work on a number of macro-prudential measures.

These include LVR rules aimed at investors and debt-to-income ratios.

Governor Graeme Wheeler said the Reserve Bank considers the LVR measures introduced to date to have been successful.

“So we are looking at LVRs and seeing if there is anything more we can do in terms of the growth of investor lending.”

For example, the Reserve Bank has been analysing whether they should be modified in some way and perhaps connected to investor properties.

While the extension of LVRs for property investors is one of the scenarios the Reserve Bank is looking at, Wheeler said no decisions have been made to date.

“We are also doing work around debt-to-income ratios. We have been collecting debt-to-income data from the larger banks over the last year, but not the smaller banks.

“This analysis will take some time. So it is possible that LVR changes could come sooner.”

However, Wheeler confirmed the Reserve Bank has had discussions with Finance Minister Bill English about possible macro-prudential tools.

“We will probably be talking to the minister again, and to Treasury, in the next few weeks in terms of the consultative processes that we go through.”

When asked about a possible timeframe for the introduction of any lending measures, Wheeler said it is possible they would be moving before the end of the year or before that.

Most commentators are already expecting that macro-prudential measures are on the way.

Additionally, last week, the finance minister confirmed the Reserve Bank has told the government it is investigating debt-to-income ratios.

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Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 6.05 6.15
TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

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