The Reserve Bank (RBNZ) says it will ease mortgage lending limits from December 1, allowing more property buyers to borrow a larger share of a home’s value.
Angus McGregor, RBNZ acting Assistant Governor of Financial Stability, said the central bank had been reviewing its approach to loan-to-value ratio (LVR) restrictions over the past year.
“We concluded that the introduction of debt-to-income (DTI) restrictions last year means LVR settings can be less restrictive on average. This includes looser default settings that we expect will be in place most of the time, except for when risks are particularly elevated,” he said.
Banks will be allowed to lend more to low-deposit borrowers, with the share of new lending to owner-occupiers with under 20% deposits rising to 25% from 20%, and to investors with under 30% deposits rising to 10% from 5%.
McGregor said these settings will give banks more flexibility to lend and improve access to credit for investors and first home buyers.
“Now is an appropriate time to move to the new default settings. House prices are within our range of sustainable estimates. Growth in mortgage lending remains moderate and the share of high-risk lending is low,” he said.
DTI restrictions will remain unchanged to limit high-risk lending during housing market upswings and periods of low interest rates. McGregor said these act as a guardrail to contain the severity of housing market corrections.
These policy settings will be the responsibility of the soon-to-be established RBNZ Financial Policy Committee from next year, and will be reviewed annually or when risks emerge.
Finance Minister Nicola Willis welcomed the change, saying it would make it easier for first home buyers to get into the market.
“Relaxing the restrictions on the amounts banks can lend will make it easier for Kiwis to get a foot on the property ladder,” she said in a press release.
20 Comments
Just. Wow.
Bankers must be missing bonuses. More debt for the win...
But it's not winning.
the revolver is almost going click.... but who would be foolish enough to buy here and not be able to lock into low long term rates?
lets see if new bag holders apply above FHBers
They're trying to make 2021 happen. It may not happen
Also shows that this country has no other vision about improving its economy than selling houses to each other
Also shows that this country has no other vision about improving its economy than selling houses to each other
Hang on. This is all about setting conditions for the marginal buyer and ideally results in a healthy market. When the property market is healthy, prices tend to rise and people feel better about themselves and are prepared to open their wallets. That 'improves the economy'.
The boffins and Willis are thinking rationally.
There's nothing healthy about something that can only survive on over leveraged speculation
so the answer is lots of people borrowing 25-30 years at low rate about to get screwed if RBNZ lift OCR? as they tend to fix short as its cheap
How about this country works for a living for a change?
You know, like making stuff, employing people.
Sorry, best we can do is making GIB and employing tradies.
Seriously though, the changes seem reasonably small and logically I can see a case for relaxing criteria now prices and therefore risks are lower. Hopefully this isn't the first of many such relaxations. It's good to see the DTIs remain and I hope they don't get touched in the future unless it's to tighten them up.
some people
Not sure why we need nanny to be deciding who can borrow money in the first place.
Plunge Protection Mode engaged.
you cannot make people borrow to buy over priced assets with cheap money... they have to lend long term...
they have still bought an overpriced asset
this will end badly as the market continues to fall
The Nz Govt and RBNZ main goal is now to be the: Property Ponzi Proection Squad!!!
They will be financially indicted due to these dangerios actions.
Here we go again.
A housing boom is our one trick pony. The dairying boom has lived up to its usual reputation of being all hype and no substance so let's do whatever we can to get the property ponzi going again.
Wow. NATS and Partners capitulate to the ponzi lobby. Sad really, just sad.
If all rentals attracted a land tax then fine, but they dont. When all the youth workers and recently arrived immigrants unable to compete against leveraged specuvestors have finished moving to Straya, look back to this day.
And then were does tax come from...?
"Pleeease take on more debt"
Uncle Swagman needs YOU.
Banks will be allowed to lend more to low-deposit borrowers, with the share of new lending to owner-occupiers with under 20% deposits rising to 25% from 20%, and to investors with under 30% deposits rising to 10% from 5%.
Me thinks it may need more then this however small numbers?
“Relaxing the restrictions on the amounts banks can lend will make it easier for Kiwis to get a foot on the property ladder,” she said in a press release.
And letting the market continue to fall will let those FHBers onto a lower priced first step.
They are not so stupid Mrs Willis... there is no FOMO anymore
I can smell the uranium on it as you lean forward!”
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.