Banks are increasing how much deposits investors need to buy real estate. Photo / file
A second major bank says it will increase the down payment requirements for investors to buy real estate from 20 percent to 30 percent.
ANZ, New Zealand’s largest bank, will introduce higher deposit rates from December 7 on the back of rival bank ASB that announced yesterday that it would immediately raise the requirement to 30 percent for investors.
On Wednesday, the Reserve Bank said it would consult on bringing back restrictions on the loan-to-value ratio from March 1. LVRs limit how much banks can lend to borrowers with low deposits.
It scrapped the LVRs for a year in May to allow banks to continue with the mortgage deferral regime put in place due to the Covid-19 pandemic and to keep lending flowing into the market.
But an unexpectedly booming real estate market has received calls from economists to bring the restrictions back sooner.
Ben Kelleher, ANZ NZ personal director, said the bank had been closely monitoring the impact of low interest rates and reduced LVR requirements on the housing market.
“It is in everyone’s interest that housing prices are sustainable in the long term and that home ownership is accessible to as many Kiwis as possible.”
Kelleher said that in October, the record month for home loans for ANZ, 31 percent of its home loan obligations were to real estate investors, while 19 percent were to first-time homebuyers.
“Today we made the decision to increase the down payment required by real estate investors to 30 percent, compared to the current 20 percent for new home loan applications from December 7th.
“As a responsible lender, it is important to us to help customers make good financing decisions, and that customers have a level of borrowing that they can easily repay. Covid-19 has made the housing market and loan decisions more complex, and we believe that any steps we can take to improve balance and sustainability in the marketplace is the right thing to do. ”
Other banks have yet to implement a hard line increase.
A Kiwibank spokeswoman said it would “act in the spirit of the reserve bank and ensure that customers can transition appropriately to the new environment.”
“Kiwibank continues to take its responsible credit obligations seriously to ensure that all credit decisions are in the best interests of the customer and appropriate to their individual circumstances.”
A BNZ spokesperson said price and credit settings are under regular review, but no changes should be announced at this time.
“The removal of LVRs has provided welcome additional flexibility and low interest rates have contributed to confidence through more energy in the market.
“BNZ is always careful with lending to ensure that people can pay off their loans even without RBNZ LVR restrictions. We think customers need to have some equity in-house to ensure they are well positioned, given the ongoing economic uncertainty. of Covid-19. “
Gina Dellabarca, Westpac NZ’s general manager of consumer banking and wealth, said it has never changed credit institutions and has remained in line with previous LVR rules.
“We have remained open to business in all segments and have increased our support for housing, agriculture and corporate clients over the past year.”
Under the previous LVR rules, banks could provide only 5 percent of new loans to investors with deposits of less than 30 percent.