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LVR loosening: advisers react

Advisers say the Reserve Bank’s decision to loosen LVR restrictions will boost homebuyers, but warn tighter credit and loan servicing conditions will restrain volumes.

Wednesday, November 28th 2018, 10:17AM

Rules were loosened by the central bank today for both investors and owner-occupiers. Banks will be able to provide 20% of their owner-occupier loans to borrowers with a deposit of less than 20%. While lenders will be able to allocate 5% of new investor loans to borrowers with less than a 30% deposit.

Jenny Campbell of the Mortgage Supply Company predicted a boost in business, but said conservative lending behaviour was unlikely to change.

She said: “We picked the LVR’s may be loosened for First Home Buyers, and so were surprised to see the tweak to the investor rules being announced as well. Advisers are crazy busy right now – this could well be a ‘perfect storm’ – lots of house stock on the market, amazing low rates, and more now more lending available for First Home Buyer loans.”

She expects banks to remain tight: “Banks haven’t eased their lending restrictions at all (even their stress rates are being left alone – even though rates are dropping), so although there will be more capacity to lend – actually securing the lending will still be tricky!”

Campbell adds high LVR investor loans “will be hard to secure”, and believes “demand will well outstrip supply”.

Kris Pedersen of Kris Pedersen Mortgages expressed doubts over whether the central bank’s decision would lead to increased business for advisers. He told TMM Online: “I don’t think it will generate that much additional business. I do think that there will be a slight uptick in business as this will be the difference for some of being able to purchase another property, however as the servicing side is now so much more difficult than a year ago this will restrain lending volumes.”

NZFSG’s head of growth Bruce Patten welcomed the Reserve Bank’s decision, but also predicted there would be no major changes from the banks: “It’s good news for borrowers, especially first home buyers. I see it as a positive thing and should free the banks up to do some more lending in this space. The more restricted lending criteria will have an impact on some borrowers though but that is unfortunately the world we live in today,” Patten added.

While The Advice Group's Stephen Wilton described the loosening as "great news". He added: "The release of the additional equity which can be used by clients to help put together their investment / retirement plans is a good result."

Nick Tuffley, ASB chief economist, said he was surprised by the loosening of rules for investors, as well as owner-occupiers: “They went further than a lot of people thought. We thought they might wait, given signs the market might be lifting over Spring.”

Tuffley cautioned there was still a “broader policy to make it easier for owner occupiers and make it more challenging for investors”.

Kiwibank’s Jeremy Couchman added: “LVR changes are just one element that have tightened lending but there are whole raft of other policies in place to mitigate the investor side so the Reserve Bank will have taken them into consideration as well.”

Tags: ASB Kiwibank Mortgage Supply RBNZ Reserve Bank Responsible lending

« LVR restrictions eased for investors and owner-occupiersBranches not efficient for mortgage origination: Elliott »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 ▼7.65 ▼7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% ▼8.59 ▲8.49 ▲7.99 ▲7.59
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 ▼7.84 7.35 ▼6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼7.24 6.75 ▼6.39
Median 8.64 7.19 7.27 6.65

Last updated: 27 May 2024 11:10am

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