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Adviser concern over DTI threat

Mortgage advisers have raised concerns about the implementation of debt-to-income limits after the Reserve Bank paved the way for their future use.

Thursday, June 17th 2021, 9:07AM 1 Comment

Brokers fear DTIs could lead to confusion for lenders and borrowers, making the home lending process even more burdensome. 

David Windler of the Mortgage Supply Company said his "greatest fear" was a rigid implementation of DTIs across the banks, not allowing lenders to take their varying lending capacity and risk appetite into account. 

He also questioned how rental income would be classed as income, and to what extent consumer debt would be tallied up. 

David Green of adviceHQ agreed.

"The interpretation and application of a DTI test is the key," he said. "What are they going to class as debt? And what are they going to class as income? What are the calculations and how do they change over time?"

Green added: "We have seen how simple policy statements can become complex in application with the latest changes to bright-line, aka capital gains, tax, and interest deductibility with the 143-page consultation paper.

"On a macro level, DTIs is further government intervention in a heavily regulated environment which detracts from the key issue: the lack of supply of land, builders, materials," Green said.

The Reserve Bank will consult lenders before adding DTIs to its regulatory toolkit. 

The central bank has hinted that DTIs might not be needed if reimposed LVR restrictions and the Government's housing reforms take the heat out of the market.

Nonetheless, advisers are concerned about the direction of travel as regulation on investors mounts. 

Kris Pedersen of Kris Pedersen Mortgages said the rules would hit large portfolios as well as mum and dad investors. Richer investors on higher incomes may be less affected than those groups, he said.

Pedersen said Finance Minister Grant Robertson was on "a crusade to beat up property investors".

Tags: DTIs Lending Mortgage Advisers property investment

« What DTI limits might look likeASB repays $9m over break-fee blunder »

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Comments from our readers

On 17 June 2021 at 10:28 am two cents said:
DTI limits are already being quoted by bank assessors.

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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.95 3.29
ANZ 4.44 3.10 3.50 3.84
ANZ Blueprint to Build 1.68 - - -
ANZ Special - 2.50 2.90 3.24
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.55 2.95 3.29
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.55 2.95 3.25
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 3.15 3.22 3.85
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 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
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 3.75 3.34 3.34 4.14
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 2.49 2.49 3.29
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 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 - ▲2.29 - -
The Co-operative Bank - Owner Occ 4.40 ▲2.49 ▲2.89 ▲3.19
The Co-operative Bank - Standard 4.40 ▲2.99 ▲3.39 ▲3.69
TSB Bank 5.34 ▲3.30 ▲3.69 ▲4.04
TSB Special 4.54 ▲2.50 ▲2.89 ▲3.24
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 3.15 3.49 3.89
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.89 3.29
Median 4.54 2.68 2.99 3.29

Last updated: 19 July 2021 9:09am

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