Overseas Investment Act Borrowing Changes - We can help you buy

LVR restrictions Ease in Jan 2019

From 1 Jan 2019, the LVR restrictions have been eased. This means more lending will be available to First home Buyers and Investor buyers.

What has been changed?

Home-lending restrictions are to ease from January next year. The Reserve Bank will ease LVR (loan to house value ratio) restrictions on bank lending to both owner occupiers and investors.

How have the LVR restrictions changed?

From January banks will be allowed to lend 20 per cent of their new loans to owner-occupiers with a deposit of less than 20 per cent. That is up from the current level of 15 per cent.

Investor deposit requirements will be lowered to 30%, and banks will be able to lend 5 per cent of their new loans to investors with a deposit of less than 30 per cent. That has changed from the current level of 35%.

Why have these restrictions been eased?

Reserve Bank governor Adrian Orr said risks to New Zealand's financial system had eased over the past six months but vulnerabilities remained.

"In particular, households remain exposed to financial shocks due to their large mortgage debt burden."

But he said both mortgage credit growth and house price inflation had eased to more sustainable rates reducing the riskiness of new house lending.

"In response, we are easing our loan-to-value ratio (LVR) restrictions on banks' new mortgage loans."

Orr said if banks' lending standards were maintained he expected to further ease LVR [loan to value] restrictions over the next few years

What does that mean from me?

If you are a buyer needing a mortgage for owner occupied or investment, talk to us about how you could benefit.

For own Home buyers this will make more funding available if you have a low deposit. We are hoping it is easier to get a mortgage with less than 20% deposit, as more available funding should mean more loans will get approved (if market demand is healthy)

Alot of our Investors sit in the 65% to 70% equity space, so it will be interesting the see the market impact with these Investors now back in the game!

Thanks for sharing!