BNZ says it'll now only lend to home buyers with a deposit of at least 20% as it strives to meet new Reserve Bank imposed restrictions on high loan-to-value ratio (LVR) mortgages.
"With new loan-to-value ratio regulations further restricting lending to customers with less than 20% deposit coming into effect, BNZ is making changes to its lending policies. Customers who are buying an existing property as an owner-occupied home will now require at least a 20% deposit across the board," a BNZ spokesman says.
"We continually review our lending policies and we’ll work with any affected customer to help assess the different options they might have. BNZ continues to lend on new build homes with at least a 10% deposit."
From November 1 the Reserve Bank has restricted the amount of lending banks can do above an LVR of 80% to 10% of all new loans to owner-occupiers, down from 20% previously. Exemptions to the restrictions include for new home construction.
Last week Kiwibank stopped honouring pre-approvals for low deposit home lending. Both ANZ and ASB said they would only continue lending to existing customers with less than a 20% deposit. Westpac said it was constantly monitoring its position to ensure it's operating within the Reserve Bank rules.
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13 Comments
100% ^^ this. Great comment. Things are unhinged and if we can stop the people entering the market from spending a ludicrous amount then ultimate prices should eventually regulate themselves. This house of cards is only being sustained by ever increasing people paying ever mental amounts.
They're not, that's the point. Instead of allowing people to borrow more to purchase an overpriced house, reduce the cost of the house. How? Increase the cost of credit. If people can't borrow as much, they can't pay as much. The cost of credit and house prices in this country are so negatively correlated it's not funny. Up one to lower the other. Done.
This announcement by Kiwibank (last week) and BNZ this week are weird.
Not because of what they have announced but because the announcement has been made 2-3 weeks after the policy came into effect.
It feels like in both cases they thought the policy might not really happen and are now playing catchup.
We're in the process of settling on a bigger place, and the sale for our existing home will take place afterwards.
ANZ still insisted we have a minimum of 20% equity on the purchase (cash deposit from parents), even after settling our mortgage on the existing place putting us at approx 50% LVR across the 2 properties.
BNZ is now accepting applications from existing customers for loans with an LVR up to 90%.
I expect this position to change if and when the bank is overwhelmed by applications in the above 80% LVR space from it's existing customers.
There was a brief blip last week when the bank indicated it will not accept applications from any customer for loans above 80% LVR.
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