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LVR has worked but Auckland risks remain: ANZ

The Reserve Bank’s LVR restrictions have reduced household debt and risky lending, but it is too soon to rule out another surge in the Auckland market, ANZ economists have warned.

Tuesday, December 4th 2018, 11:39AM

Sharon Zollner

The RBNZ loosened LVR restrictions for owner-occupiers and investors last week, following a period of stabilising house prices, particularly in Auckland, over the past year.

In their weekly update to the market, ANZ’s economists, led by Sharon Zollner, say LVR has “worked”, with NZ household debt to disposable income levels at 167%, compared to near 190% in Australia. Despite this, the bank warns the Auckland market may not have been tamed for good: “The Auckland housing market is behaving itself but history warns against ever ruling out a second wind.”

ANZ economists say LVR will remain a key part of the Reserve Bank’s “regulatory toolkit”, but could be tightened again if lending runs out of control in key cities: “All up we see the housing market remaining contained, with the LVR restrictions still ‘tight’ at these levels, but the RBNZ won’t hesitate to adjust them in either direction should it deem warranted.”

The bank forecasts a relative period of stability in New Zealand, with competitive mortgage rates, population growth and availability of financing tempered by tougher regulation on landlords, the threat of capital gains tax, and the foreign buyer ban.

The economists predict Governor Adrian Orr will proceed to ease LVR restrictions further if the market remains stable: “Whatever happens, the new RBNZ Governor has made it clear that he isn’t the type to die wondering. If he judges that the LVR restrictions need to move in either direction, he’ll get on with the job, unapologetically. But if the housing market, lending standards and credit growth behave themselves, as is our central expectation, ongoing cautious easing will be the default path.”

Tags: ANZ LVR

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 3.29 3.45 3.85
ANZ Special - 2.79 2.95 3.35
ASB Bank 4.45 3.35 3.19 3.85
ASB Bank Special - 2.85 2.69 3.35
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - 2.79 ▼2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.39 ▼3.29 ▼3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 2.80 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.80 2.89 3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 4.40 2.95 2.95 3.69
Kainga Ora 4.43 ▼3.29 ▼3.39 ▼3.85
Kiwibank 4.40 3.74 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - 2.65 2.79 3.25
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 3.75 3.99 -
Pepper Essential 5.18 - 4.98 4.98
Resimac 3.49 3.45 3.39 3.69
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - 2.99 3.05 3.69
The Co-operative Bank - Owner Occ 4.40 ▼2.79 ▼2.95 ▼3.39
The Co-operative Bank - Standard 4.40 ▼3.29 ▼3.45 ▼3.89
TSB Bank 5.34 3.59 ▼3.59 4.19
TSB Special 4.54 2.79 ▼2.79 3.39
Lender Flt 1yr 2yr 3yr
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.79 ▼2.69 ▼2.79
Median 4.55 3.32 3.39 3.69

Last updated: 28 May 2020 10:38am

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