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Last Article Uploaded: Thursday, October 28th, 1:09PM

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New lending rules likely

There is a "high" probability of extra rules to curb house price inflation such as DTIs and interest-only lending restrictions, according to economist Tony Alexander. 

Friday, March 5th 2021, 9:56AM

Alexander believes that the Government and Reserve Bank are likely to impose additional measures to cool the runaway housing market in the coming year.

The forecaster predicted any new rules would likely be focused on investors buying existing properties. 

Reserve Bank governor Adrian Orr and Finance Minister Grant Robertson are reviewing the potential introduction of debt to income ratios as house prices soar. 

There is mounting speculation about interest-only lending limits. Robertson has asked the RBNZ to consider whether curbs would lower risks in the NZ financial system.

Alexander said new restrictions are likely to mark a "structural downward shift coming in the average pace of house price growth in New Zealand over the next 5-30 years".

"My expectation is that having risen on average 6.8% per annum since 1992, the average pace of house price inflation will now slow down toward 5%," he said. "We are unlikely to fall to that pace this year, but over 2022-2023 such a slowing is possible assisted by slowly rising house supply."

It comes after the Government instructed the Reserve Bank to consider house price inflation as it sets monetary policy. 

The new RBNZ remit could prompt the central bank to lift existing LVR restrictions, Alexander added. 

It does increase the chances, quite strongly, that the 40% minimum deposit for investors buying a house with debt will be taken to 50% before the end of this year. Sixty per cent cannot be ruled out but it is unlikely."

Tags: house prices housing market Lending Tony Alexander

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 ▲3.25 ▲3.75 ▲3.99
ANZ 4.59 3.84 4.30 4.54
ANZ Blueprint to Build 1.68 - - -
ANZ Special - 3.24 3.70 3.94
ASB Back My Build 2.04 - - -
ASB Bank 4.45 ▲3.25 ▲3.75 ▲3.99
Basecorp Finance 5.49 - - -
Bluestone ▲3.74 ▲3.54 ▲3.89 ▲4.09
BNZ - Classic - ▲3.24 ▲3.79 ▲3.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay ▲4.70 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.70 ▲3.84 ▲4.39 ▲4.59
BNZ - TotalMoney 4.70 - - -
CFML Loans 5.15 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 3.95 ▲4.10 -
Credit Union South 5.65 3.95 ▲4.10 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.25 1.85 2.35 2.65
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC ▲4.15 ▲2.89 ▲3.29 ▲3.49
Kainga Ora 4.43 2.88 3.28 3.59
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 4.00 ▲4.14 ▲4.44 ▲4.84
Kiwibank - Offset 4.00 - - -
Kiwibank Special 3.75 ▲3.29 ▲3.59 ▲3.99
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 3.05 3.45 3.75
SBS Bank Special - 2.55 2.95 3.25
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - ▲3.04 - -
The Co-operative Bank - Owner Occ 4.55 ▲3.24 ▲3.70 ▲3.99
The Co-operative Bank - Standard 4.55 ▲3.74 ▲4.20 ▲4.49
TSB Bank 5.34 ▲3.75 ▲4.20 ▲4.44
TSB Special 4.54 ▲2.94 ▲3.40 ▲3.64
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.84 3.79 4.39 4.59
Westpac - Offset 4.84 - - -
Westpac Special - 3.19 3.79 3.99
Median 4.57 3.24 3.70 3.99

Last updated: 28 October 2021 8:59am

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