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Small investors pull back

Investors with one or two properties are bearing the brunt of the Government's housing market reforms, according to mortgage advisers.

Monday, July 19th 2021, 6:13AM

by Daniel Dunkley

Glen McLeod

Following the Government's housing market changes and the reintroduction of LVR rules, mum and dad investors and more recent entrants into the investment sector are beginning to pull back.

Craig Pope of Loan Market in Wellington has seen "60% less investor loans" in recent months, with activity balanced by a rise in successful first home buyer activity. 

"I think investors are reaching a point where it’s just too much debt to keep leveraging," said Pope. 

The same trend was noted by Glen McLeod of Edge Mortgages, who has noticed a decline in purchases among investors that have one or two investment properties.

He added: "The hard-core investors don’t seem to be too bothered by the changes."

McLeod said some investors had begun to borrow to prepare their rentals for sale after getting "sick and tired" of market conditions. 

He added buyers were reluctant to keep existing family homes as investments as they moved to a second house.

"This is [the] real shame of this law where the clients are actually wanting to help with their own retirement. The only option that they really get left with ... is KiwiSaver or investing into stock shares and bonds.

"I’ve been watching with interest for the number of petitions that have been going around relating to trying to stop this change, and look forward to the outcome of the consultation process at the same time," McLeod added.

The comments come as new data from CoreLogic underlines the impact on investor activity. 

According to Q2 data, the largest falls in mortgaged investors' market share over the past three months was among buyers with two properties after their latest purchase, and those with three or four properties. 

"These smaller investors are potentially affected most by the tighter financing requirements and also perhaps take the more cautious path as they wait to assess what the final rules might actually be," said CoreLogic's Kelvin Davidson. 

The CoreLogic data shows mortgage investors’ share of purchases in June was 24.2%, the lowest since June last year, and 25% for the three months to June.

Tags: CoreLogic LVR OCR OCR forecasts property investment

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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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