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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 »

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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 7.74 7.35 6.99
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% 8.84 8.09 7.59 7.29
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 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
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 7.17 6.65

Last updated: 12 June 2024 4:04pm

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