The emerging credit squeeze for those with low deposits seeking homes has gained another leg, with the country's largest bank ANZ now saying it's closing the door on applications for mortgages with under 20% deposits.
This news follows closely on from BNZ and earlier Kiwibank making similar moves.
The Reserve Bank confirmed on September 23 that banks would be restricted to doing just 10% of new residential mortgage lending to borrowers with less than a 20% deposit, down from 20% previously. The announcement came after a consultation period starting in early August, with the Reserve Bank pushing out the proposed start date by a month to November 1.
ANZ says it's unable to accept new home-loan applications to buy existing homes where the loan-to-value ratio (LVR) is greater than 80%. The Reserve Bank's 10% "speed limit" is in line with what was originally implemented when high LVR restrictions were first introduced in 2013.
ANZ Managing Director for Personal Banking Ben Kelleher says the move is temporary.
"The change impacts a relatively small number of ANZ customers, around 10% of home loan applications. We want to assure customers this pause is a temporary measure and is necessary to help us meet the new LVR rules," says Kelleher.
“For those who may have been planning or in the process of applying and now won’t qualify, we encourage them to talk to us about other options."
Customers with existing home loan approvals and pre-approvals aren’t affected, and borrowers seeking low deposit loans for new builds are also unaffected. New builds are exempt from the Reserve Bank rules.
The Reserve Bank tightened LVR restrictions in an attempt to rein in a red hot housing market which has seen banks do record volumes of mortgage lending. It also marks a dramatic turnaround from April 2020 when the Reserve Bank removed LVR restrictions completely in the early days of the Covid-19 pandemic.
*Additional reporting Gareth Vaughan.
27 Comments
For the past consecutive 12 months , new mortgage commitments above 80 percent in aggregate have been below the 10 percent threshold on a monthly basis using the RBNZ C30 data.
Seems a little odd that all banks now have a urgent need to restrict lending to comply with new RBNZ rules given that on the surface this is already being done, or is it a consequence more of the rapid change in valuations ,which has enabled low commitments to high LVR new mortgages
Lending criteria is harder the closer you get to a 10% deposit.
Some people can do a 10% deposit, some need a 15% and some need a 20% deposit - all depends on the affordability assessment.
This should have been explained and made clear to you in your discussions, unfortunately.
Great timing as the RBNZ calls for submissions on Debt serviceability restrictions
https://www.rbnz.govt.nz/regulation-and-supervision/banks/consultations…
Ironically in the RBNZ's assumptions in this paper their two scenarios of high house price inflation (15%) and low house price inflation (5%) don't have negative numbers (so does that mean they don't believe house prices are coming down either?) 5% capital appreciation with loans available below that rate.....hmmm if only we could rely on their modelling numbers
as ashley keeps telling us house prices go up like in march this year
Property commentator Ashley Church predicts house prices will double in next six years
Ashley Church told 1 NEWS it would be "nonsense" if anyone had been advised to wait for a dip in prices.
"It's just the wrong thing to do," he said.
"The boom is here for a while."
Is Ashley a time traveler I don’t think so . If a house in Auckland is 1.2 million how can the average wage earners afford to buy need to have 240000 deposit then a mortgage 960000 for 30 years, 5.5 rate 1250 per week , let’s say these people take home 1900 a week this couple would have 650 a week for food car power rates water phone not much to live of no chance of having kids not much of a life. This is as inflation and interest rate are going up. You tell me is Ashley someone to listen to if he is happy with average kiwi family being in position like this.
Really you cannot live on $650 a week after paying the mortgage ? My entire take home pay was $700 a week for years and then I had to pay the mortgage. Clearly there is still room for house prices to increase and they will, be it at a much slower rate from pretty much this point in time.
650 * 52 = 33,800 a year to spend. (with 2 people working and 1 child). Now take away:
Child care : 13.000/year
Rate and Water and strata: aprox 4000/ year
Petrol: $80/w x 52 = 4160/ year
Internet: $50/m x 12 = 600/year
Grocery: $200/w x 52 = 10.400/year
That will leave a normal family with $1640 spare cash for any unexpected expenses. Factored in eating out and insurance, they'll be in the negative. And to take home $1900 net a week like OP stated, the couple would have to be on around 150k combined income, not low income by any stretch of imagination.
What happen if rate goes up 7.5% left with 450 a week for all the expenses to live between 2 of them
petrol $80
food 240
power 80
Phone internet 50
rates insurance 60
I can go on but we have already spent everything.money is not worth what it was went your were getting 700 a week was your mortgage 1500 a week. I don’t get your point if we go back to 1950 you could probably buy a house for $1500
"KiwiSaver funds held by banks aren't included among the unsecured liabilities to be "pre-positioned" for the Reserve Bank's Open Bank Resolution (OBR) policy meaning, if a bank got in trouble and had the OBR policy applied to it, the KiwiSaver money would remain frozen in full at the behest of the bank's statutory manager."
Not sure if you ever get to see it again though , once the banks gambling debts are paid off......
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