Kiwibank says RBNZ loan restrictions and rivals cancelling pre-approvals are 'testing our models'

Kiwibank says RBNZ loan restrictions and rivals cancelling pre-approvals are 'testing our models'

By Gareth Vaughan

Government owned Kiwibank says it hasn't cancelled any pre-approved high loan-to-value ratio (LVR) home loans and is confident it won't need to despite rivals doing so to enable them to fall into line with Reserve Bank restrictions.

"No, we haven’t cancelled any and we currently have no plans to cancel any pre-approvals," a Kiwibank spokesman told interest.co.nz. "Kiwibank pre-approvals are valid for three months so as they expire we will assess our capacity to extend our commitment to our customers for another three months."

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If you ever wanted proof that the LTVR will have no dampening effect or impact on house price increases or demand for housing ...
Look at the  the bidder at THE BLOCK auction last night  :

  • A Chinese from Hong Kong
  • Can borrow the mortage funds  in Hong Kong or Shanghai from the HongKong- Shanghai Banking Corporation (better known as HSBC with a branch at No1 Queen St Auckland) at a mere 2,5 to 3%.
  • Does not require residence status to buy property here .
  • Couldn't care less about the LTVR rules , they dont apply if you borrow overseas
  • Can pay twice as much as a Kiwi homebuyer who has to pay 5,25 to 5,99%for the same instalment
  • Smiling all the way !

Three houses sold to foreigners and one to a kiwi. Not sure if anyone has residency out of the three.
It is always interesting to ask property managers and property maintenance companies what percentage of their clients are off-shore investors.
 
LVR's were not designed to dampen house prices they were designed to increase them.
 

We don't know what his or any other 'foreigner's' legal status or affiliation with NZ is?.
That's the pproblem - noone has thought about gathering that information at the coalface ie: on the Real Estate's sales room desk upon all parties signing!!
A simple 10 point yes/no anonymous questionnaire as part of the process would clarify the demographic questions of "who is who and what is what" .
This could then be passed on to the analysts at Treasury/RBNZ/Housing Ministry and clarify what is actually happening - who is buying; how old they are; where they are from; if it's live in or investment; other reason for selling/buying; etc...etc
I mean how much ink and talk and speculation and zenophobic rattling and intergenerational dislike and prejudice has been accorded this whole subject.
It's an easily solved puzzle ...are the responsible authorities BRAIN DEAD?

I bet you would not have above comments if buyer were an European guy from whichever European country.

Xingmowang - it has nothing to do with anyone's enthinicity.  It has to do with the country of citizenship and residency. If there is a tax treaty between countries then the investor pays tax in the country they reside in.  Local investors regardless of their ethnicity pay taxes in NZ while foreign investors pay their taxes in the country they reside in.
If too many foreign investors have a large ownership of NZ assets then they will not be contributing to the NZ economy via taxes. NZ'ers who live overseas generally pay taxes in the country they reside in.
 
It is extremely unhelpful when people raise the xenophobic flag when they reside in NZ as this just misses the point of the conversation and problem. We are all getting screwed by our internal tax system.
Would it not be better to tax all investors/people in the Country the income was generated in?
I just want a fair system that is equal for all and at the moment foreign investors get a better deal than locals.

According to the Minister of Finance this is referred to as "foreign investment" which apparently is good for the country.

Investment implies a return to the country. Can BE tell us what the annualised return is to the country on this foreign investment in housing? How much tax is generated from this income investment?

its simple .   Len and Bill and John and  Nik -  dismantle the akl  and chch Urban growth boundaries NOW,  slashhhh   land prices and stop the nonsense going on with pricing and speculating.
create the incentives to Divert the $ billlions from housing to biz funding and provide youth jobs before we have a generation of unemployable Facebook  and booze addicted freaks