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Advisers divided on LVR return

Loan to value ratio restrictions are poised to return in March, but advisers are divided on whether it is a positive or negative move by the Reserve Bank.

Thursday, November 12th 2020, 12:46PM

The central bank announced a U-turn yesterday, opening a consultation on reimposing LVRs from March next year. The rules were originally scrapped in May for one year. 

It is unclear whether the return of LVRs will capture just investors or will also include owner-occupiers. The RBNZ cited a rise in "higher risk investor lending" in its announcement. 

Shane Ridley, an adviser at Money Bridge, said a reinstatement of LVRs would not change more important factors influencing the rise in property prices. 

"New Zealand is going to have high numbers of people coming into the country to live permanently for the next five years or more," Ridley said.

He added: "It is and always will be supply and demand that determines house values. Clients who already have equity in their current properties will still look to purchase some form of investment as who wants to leave their funds in the bank?"

Kevin Russo, an adviser at Mortgages 101, said bringing back LVRs could make problems worse for renters and those looking to buy. 

Russo said: "I don’t think that the LVR restrictions will make any difference to the housing market, as we have huge demand for homes now that interest rates are at record lows and very short supply of housing across every sector. This is at a time when we need more homes being made available to meet the demand and investors certainly have their part to play in the market."

Others were more supportive of the RBNZ decision. AdviceHQ's David Green believes the RBNZ should introduce LVRs before March.

"A prudent approach would have been to reintroduce them at December 1. Why do they need consultation and a three month notice period?"

He warned the delayed reintroduction of LVR restrictions could further fuel the housing boom.

"A 'get in while you can' approach may be taken by investors and low deposit borrowers," Green said.

Tags: Lending LVR

« Orr has no regrets on scrapping LVR limitsASB brings back investor LVRs »

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.09 3.25 3.39
ANZ Special - 2.49 2.69 2.79
ASB Bank 4.45 2.49 2.59 2.65
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.49 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.09 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 ▼2.45 ▼2.65
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 2.99 ▼3.09 ▼3.15
SBS Bank Special - 2.49 ▼2.59 ▼2.65
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.69 2.79
The Co-operative Bank - Standard 4.40 2.99 3.19 3.29
TSB Bank 5.34 3.29 3.29 3.59
TSB Special 4.54 2.49 2.49 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.49 2.69 2.79
Median 4.55 2.94 3.07 2.80

Last updated: 27 November 2020 3:57pm

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