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Investors pull back

Tighter loan-to-value ratio (LVR) rules have already had a significant dampening on investors.

Monday, May 10th 2021, 10:13AM

Lending to investors has taken a dive, even before the impacts of the Government’s extension of the bright-line test and tax policy changes start to filter through.

CoreLogic senior property economist Kelvin Davidson says the tighter LVR rules from March 1 – and effectively before that because of banks’ own actions – have significantly curtailed the low-deposit investor flows.

“Banks had already moved well ahead of the official date for tighter LVRs, and went further, requiring a 40% deposit before the Reserve Bank’s date of May 1 for higher investor deposits kicked in. As a result, high LVR lending to investors has quickly returned to less than the mandated speed.”

As property sales volumes were high in March, Davidson says it is no surprise mortgage lenders had another bumper month.

Reserve Bank (RBNZ) figures show lending flows of $10.5 billion in March, up by $4.3 billion from a year ago – although lending in March last year was affected by the first week of the alert level four lockdown.

Interest-only lending activity is still relatively high for investors, at about 42% of new loans in March and 39% of the outstanding stock, while investors with a fixed rate mortgage of one year or less account for 19% of loans.

When combined with owner-occupiers on 46% of loans it is a total of 65%, up sharply from 47% a year ago.

Davidson says the possibility of further curbs on investor demand, such as interest-only lending caps and/or debt to income restrictions, will be known later this month when the RBNZ gives its analysis to the Government.

The Government will then need to approve any new tools and there will also be a consultation phase before the RBNZ makes any changes.

“Regardless of how long all of that might take, the tighter investor/tax rules already announced suggest the RBNZ may well be happier to take a ‘wait and see’ approach before taking even more action.”

Tags: property investment

« Landlords taking time to thinkNew homes under threat from overstretched construction sector »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.19 2.59 2.99
ANZ 4.44 2.79 3.19 3.59
ANZ Special - 2.19 2.59 2.99
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.19 2.59 2.99
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - ▼2.19 2.55 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼2.79 3.15 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
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 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 1.95 1.85 2.35 2.45
Heretaunga Building Society 4.99 3.80 3.90 -
HSBC Premier 4.49 2.19 2.45 2.69
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 ▼2.15 2.35 ▲2.75
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.04 3.40 3.84
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.19 2.55 2.99
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 2.69 2.99 3.29
SBS Bank Special - 2.19 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - ▼1.99 - -
The Co-operative Bank - Owner Occ 4.40 ▼2.19 2.59 ▲2.99
The Co-operative Bank - Standard 4.40 ▼2.69 3.09 ▲3.49
TSB Bank 5.34 2.99 3.35 3.79
TSB Special 4.54 2.19 2.55 2.99
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 ▼2.79 3.19 3.59
Lender Flt 1yr 2yr 3yr
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.19 2.59 2.99
Median 4.55 2.68 2.99 2.99

Last updated: 22 June 2021 9:57am

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