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Impatient buyers wait in limbo as banks take up LVR slack

Would-be home buyers are being forced to mark time waiting for the banks' high Loan to Value (LVR) quota to slip within the Reserve Bank's maximum acceptability limit.

Monday, January 17th 2022, 8:48AM 1 Comment

In some cases they are forced to drum their fingers on the table for weeks or even a month or two, and watch the price of their home steadily rising as they wait for banks to be allowed to give them a loan.

The problem stems from a requirement that no more than 10% of total bank mortgage lending can have a deposit of less than 20%.

This is the result of the Reserve Banks' tight LVR policy which it has touted as a robust inflation fighting tool.

It mainly limits the ability of first home buyers to get a home, since they usually have small deposits, painfully built up by meticulous saving, all the while paying high rent for their flats.

But many of them are hard working, skilled or qualified, and well paid, and are desirable clients for banks and mortgage brokers, despite their low deposit.

But if too many of them seek a high LVR loan at once, then a bank can rapidly approach its 10% quota, and be forced to deliver a blanket message to all subsequent applicants: NO.

This is a problem that worries Sarah Bloxham of Auckland's Let's Talk Mortgages and Insurance.

“The banks are paused (on high LVR loans) and I don’t think they know when they are going to open,” Bloxham said.

“Meanwhile house prices are going up, so you are looking at less house than you were looking at before, that is the hard bit.

“Before Christmas I had three clients aiming at houses for $950,000, now we are waiting and waiting and those houses are going up and up and the longer people are having to wait the less house they will get for their money.”

Bloxham says despite these problems it is important for people not to get despondent, they simply have to keep working at the problem, and perhaps look at a new-build, where the rules are more lenient.

Meanwhile, it is not clear when this will end and the door will re-open to high LVR applications.

“A couple of the banks have indicated February or March but I wouldn't be holding out anything to anybody, people have just got to be patient and wait.”

« Job market an inflation risk: ANZMortgage advisers closely watching CCCFA enquiry »

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Comments from our readers

On 17 January 2022 at 12:39 pm two cents said:
You would think the RBNZ would get real and release the LVR Bank limits in this market to help more people get into homes!

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Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 6.05 6.15
TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 16 May 2022 9:03am

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