A Horizon Research Poll has found almost 40% of New Zealanders would oppose a Reserve Bank limit blocking mortgages with a loan to value ratio of over 80%.
However, the poll also showed almost as many respondents approved of the limits.
The poll of 2,265 adults nationwide found 39.1% disapproved of a RBNZ limit on LVRs above 80%, while 36.6% approved and 24.4% were not sure.
The poll also found that 50.8% approved of the RBNZ's plans to increase capital requirements for such high LVR lending by New Zealand's four biggest banks, while 18.3% disapproved and 30.9% were not sure.
Opposition to a limit on high LVR mortgages among the age groups was strongest among 45-54 year olds with 48.8% opposed. Those with income of NZ$150,000 to NZ$200,000 were most opposed among the income groups, with 55.5% opposed.
By occupational group, disapproval was highest among labourers, agricultural and domestic workers (61.2%), teachers, nurses, police and other trained service workers (59.5%), business managers and executives (58.2%) and homemakers not otherwise employed (54.5%).
Approval for such limits on high LVR mortgages was highest among those aged 55+ and retired superannuitants (49.7% approve, 13.6% disapprove).
Horizon said many respondents to the poll said high LVR limits would have severe impacts on home buyers.
"Many complained it would delay or end their intention to buy," Horizon aid.
"Others complained they were not on a level playing field: that overseas buyers were borrowing at lower interest rates offshore – and bidding prices up on the New Zealand market."
The RBNZ has already ordered the big four banks to hold more capital on high LVR mortgages, but has yet to decide on how to limit high LVR lending.
It has indicated a preference for 'speed limits' on such lending, which would put the onus on limiting such lending on the banks themselves, ordering them to limit a certain percentage of their overall or new lending to such loans.
Prime Minister John Key has indicated first home buyers could be 'carved out' of the limits, but the Reserve Bank has downplayed that idea.
9 Comments
And the margin of error was.....huge!
By now the quantity and quality of the humbug generated on this issue has done the job ...the peasants think the problem no longer exists..we don't live in another failed property bubble economy, that is dependent on ponzi policy credit spewing from the banks and our wonderful forward thinking govt is working hard alongside our superbly efficient reserve bank to protect us and prevent NZ from joining all the other failures......yeah sure.
Interesting on how ppl seem to be voting for or against something depending on how impacts them, how shallow. If Steve Keen is right this should slow down first time buyers and in turn slow the market....the Q is, will it cause drops.
So Q the detractors....if it causes drops "it must be removed immediately before it beggars us all", if it does little, "it must be removed as it achieves nothing"
regards
I don't think it's unreasonable for people to vote for what benefits them, that's democracy.
The Q should be, "would it make home ownership more affordable/achievable for young people?". In a market with a supply problem the answer is no.
If young Aucklanders can't buy a home for what ever reason they have to rent, problem is there is also a shortage of rentals. No point in increasing OCR and LVR's to discourage home ownership when there is also a shortage of rentals. Flood the market with affordable homes (flats, apartments, terraces, etc), offer affordable interest rates and affordability will improve. If you push down the value of houses, NZ wil likely go into recession, a recession leads to job losses, people without jobs can't buy anything, let alone houses.
I'd hazard a guess that a lot of the investors who survived the last few years are sitting on relatively low LVR's. An LVR limit would make it even harder for first home buyers to get a foot on the ladder and easier for established investors to buy the cheaper houses.
Investors will barely blink at these higher LVRs. Imagine a investor with 3m portfolio in a market increasing by 15% PA. If they want to buy more houses they revalue their portfolio once a year (in this example up to 3.45m) and there's the deposit/equity for 2 more.
In the 'olden days' I used to hear all the time about second, third and even fourth Mortgages. Seems a sensible system now to me. It created clarity if you borrowed as to what the situation actually is. Probably did some clear pricing as to risk because the interest rates for each was different, and it incentivised people to get rid of the high interest second mortgage first. And I guess would enable the true value of the lenders book to be extablished more clearly.
In the extreme, if you could see your bank had many loans with security ranked fourth in the queue, that would be a useful warning sign as to where to place your deposit.
I don't really get this situation where people can get mortgage of near 100% but are charged some sort of insurance premium. While that could be seen as the same, it does not provide the clarity of the above.
I wouuld favour loan to valuation limits. I see that people could still do the second mortgage thing if required ( and always have been able to actually), which would provide a list of advantages as above.
http://www.anz.com.au/personal/home-loans/choose-home-loan/extras/suppl…
chat now to David the ANZ Home Loan Team Leader
Ya can't lose with houses!
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10885901
Maaaate.
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