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New-to-bank lending freeze

Banks have stopped taking on new borrowers above 80% LVR, despite the end of loan-to-value ratio restrictions last month.

Wednesday, June 17th 2020, 8:35AM

Bruce Patten

Banks across the board have tightened their criteria for new borrowers, putting a strain on home buyers in the wake of Covid-19. 

Advisers report Westpac was the last big bank to stop taking on new borrowers over 80%, changing its strategy last week. In most cases, customers are stuck with their existing bank, with no option to shop around.

Lenders are shying away from higher-LVR borrowing and focusing on existing customers and processing hardship and deferral requests, advisers said.

"Literally no-one is doing over 80 new-to-bank at the moment, but it will open up again," said NZFSG's Bruce Patten. "But once the banks are comfortable with the housing market they will be all over them again."

"The banks are having too many problems dealing with new-to-bank clients at the moment, and want to support existing clients. They have enough work processing clients to interest-only and payment holidays. The staff also have their hands full with reduced hours," Patten added.

Brokers report banks are also getting tough on increasing debt on existing customers.

Glen McLeod of Edge Mortgages is attempting to find a lender who will do 90% LVR for an owner-occupied property. The client already has an investment property but wants a home to reside in.

"That is where it is definitely getting quite difficult. I’ve spoken to a number of lenders and they will not take on a 90% under occupied-loan where the client already has an investment property. Adding in the fact that over 80% requires existing customer status makes it extremely difficult."

Tags: home loans Lending LVR mortgages Westpac

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Full Rates Table | Compare Rates

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

Last updated: 16 May 2022 9:03am

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