tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Tuesday, March 2nd, 11:36AM

Mortgages

rss
Latest Headlines

Advisers react to LVR changes

The Reserve Bank has imposed strict new LVR requirements on investor lending, but advisers say other measures may have been more appropriate to help first home buyers.

Wednesday, February 10th 2021, 9:27AM

Glen McLeod

The RBNZ has introduced a new "60/5" rule, meaning banks will only be able to issue 5% of their new loans to investors above 60% LVR.

In effect, the new rule means investors will struggle to get a loan unless they have a 40% deposit. 

The new regulations officially come into effect from May 1, but deputy governor Geoff Bascand wants banks to impose them "immediately".

Advisers say the changes were inevitable, but believe different measures would have been more effective in cooling the market. 

Glen McLeod of Edge Mortgages said: "The Reserve Bank I guess was forced into having to make a move to slow down the housing market. It has been rocking along at a pace which is probably unsustainable. With the political commentary around house prices along with comments via the media it was [a] given that the reserve bank would have to do something."

He said the new rules would not address the "fundamental" problems facing the market, namely a lack of supply. 

"There are still a number of the fundamentals that are not addressed. The low interest rates encouraging buyers to purchase housing. The lack of any other real safe investment opportunities. Lack of housing both for owner occupation and for investment ... Surely at a time like this where we are 100,000 houses short some sort of inducement should be given to creating new housing stock by building."

He called for First Home Loan price caps to be lifted, with most Auckland properties too expensive to be eligible for the scheme.

"A further review of the First Home Loan rules needs to be looked at, a $600,000 purchase in Auckland is ridiculous. The same can be said for other areas around the country where the caps are now null and void."

Craig Pope of Wellington-based Pope & Co Mortgages said the new LVR rules would primarily impact new "mum and dad" investors, rather than serious players with large portfolios and strong equity levels. 

"I think restrictions to how much interest only lending banks do would probably have a more reaching effect," he said.

Pope was disappointed to see LVR restrictions come back for owner-occupiers, particularly low deposit first home buyers.

"I would have preferred there not to be restrictions for over 80% borrowing, the banks already make it difficult for those low deposit borrowers," he added.

Further law changes for the housing market are expected at May's budget. 

Prime Minister Jacinda Ardern said the Government wants to "tilt the playing field towards first home buyers", while Finance Minister Grant Robertson plans to incentivise "more investment in the construction of homes".

Tags: first home buyers housing market housing shortage investor lending Lending LVR RBNZ Reserve Bank

« Reserve Bank tightens LVR rules for investorsSub 2% for HSBC »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 ▼2.29 ▼2.59 ▼2.65
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 2.29 2.59 2.65
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 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 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% - - - -
HSBC Special - 1.99 - -
Lender Flt 1yr 2yr 3yr
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.79 3.04 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 2.79 2.79 3.15
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.29 2.29 2.65
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
TSB Bank 5.34 3.09 3.29 3.45
TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.29 2.69 2.79
Median 4.55 2.79 2.99 2.80

Last updated: 26 February 2021 11:27am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com