The country's largest home lender ANZ says from now it will require investors to have 40% deposits.
This goes further than the recommendations of the Reserve Bank, which is moving to have 30% deposits for investors in place by March. It comes as the housing market has absolutely taken off with prices having risen by 18.5% in the past 12 months. The RBNZ is currently consulting to reintroduce loan to value ratio (LVR) restrictions, which it removed in May. The proposal from the RBNZ is to reinstall the restrictions exactly as they were when removed in May. This means 30% deposits for investors and 20% for owner-occupiers, with banks able to lend up to 20% of their new mortgage lending for loans in excess of 80% of the value of the property (IE for deposits of under 20%). Most major banks have already adopted these rules ahead of the planned March reintroduction. But now ANZ has gone further. The 40% deposit level for investors actually aligns to what the requirement was back in mid-2016 when, with more than a hint of desperation, the RBNZ slammed 40% deposits on all investors. It worked. Subsequently these rules were relaxed over the past two years as the heat came out of the housing market. In the New Zealand market, ANZ is a very big player. It accounts for just under a third of the total mortgage lending. ANZ Managing Director Personal Ben Kelleher said the bank's decision followed two months of record levels of mortgage lending. In those two months some 32.4% of the new mortgage lending had gone to investors, while 18.3% had gone to first home lenders. “Escalating property prices are putting home ownership out of reach for many Kiwis," Kelleher said. "The current settings favour property investors particularly over first home buyers, potentially locking a generation of New Zealanders out of home ownership. “It’s in everyone’s interests for residential property prices to be sustainable long term, and for home ownership to be accessible to as many people as possible. “As New Zealand’s largest home lender, decreasing the LVR on residential investor lending is one thing we can do to help bring balance to the residential property market.”. Here is the announcement from the ANZ: ANZ Bank NZ today announced it would require a 40% deposit from residential property investors as a step to bring balance to the housing market. Effective immediately, investors will need equity of 40%, up from the current 30%, when borrowing to buy residential property. There are no changes to deposit requirements for other residential buyers, including first home owners. ANZ Managing Director Personal Ben Kelleher said ANZ would also be recommending to the Reserve Bank of New Zealand (RBNZ) as part of the current consultation that loan-to-valuation ratios (LVR) be set at 60% for residential property investors, rather than the 70% that has been proposed. “We’ve been closely monitoring the impact on residential property prices of historically low interest rates, reduced LVR requirements and existing issues with supply and demand,” Mr Kelleher said. “Escalating property prices are putting home ownership out of reach for many Kiwis. The current settings favour property investors particularly over first home buyers, potentially locking a generation of New Zealanders out of home ownership. “It’s in everyone’s interests for residential property prices to be sustainable long term, and for home ownership to be accessible to as many people as possible. “As New Zealand’s largest home lender, decreasing the LVR on residential investor lending is one thing we can do to help bring balance to the residential property market.” ANZ has seen two record months of residential property lending with 32.4% going to residential property investors and 18.3% to first home buyers. He said ANZ would longer term be guided by the outcomes of the RBNZ’s consultation process early next year. Hargreaves, D. (2020, December 15). The country’s largest home lender has announced a more strict lending. Interest.Co.Nz. https://www.interest.co.nz/opinion/108413/countrys-largest-home-lender-has-announced-more-strict-lending-policy-housing
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