Property investors should consult mortgage advisers on DTI impacts

“Some investors will need to make their next purchase before mid-year,” Nick Gentle of iFind Property says.

By then banks will probably be able to lend only 20% of their residential loans to investors with a DTI greater than seven times their incomes should DTIs be introduced.

RBNZ deputy governor Christian Hawkesby says the financial stability risks of ‘boom and bust’ credit cycles are significant, so it’s important to ensure banks have appropriate policies in place to manage them. Banks have had since April last year to prepare.

On average the DTI ratio now is between three and four times income. For the average mortgage borrower the restrictions won’t have much effect but 5-10% at the margins won’t be able to get a mortgage.