Bernadette Kirwan, Mortgage Broker, Loan Market
We’re about to come in to the traditional spring house selling season, and a great time of year for property owners to evaluate their investment and their financial situation and think about their set up.
The big finance story for home buyers has been the Reserve Bank (RBNZ) changes to LVR (loan to valuation requirements) regulations which continues to dominate. The banks have been given some breathing space ahead of the spring selling season with the new changes now taking effect from 1st October 2016.
Under the new amendments, banks will only be able to allow 5 per cent of loans to residential property investors to have an LVR of greater than 60 per cent (i.e. a deposit of less than 40 per cent of the value of the property). Additionally, loans to owner-occupiers with an LVR of greater than 80 per cent will be capped to 10 per cent of total bank lending.
The RBNZ anticipates the strict constraints on mortgages will work toward reducing house price increases. The changes have also been put in place to protect those with higher borrowing needs, as they’re the most vulnerable segment of the market and the worst affected in the case of economic or financial downturns such as a recession, increase in interest rates, or a decline in the housing market.
Loans already exempt from the existing LVR restrictions, such as loans to construct new residences, are not currently affected.
With these changes ahead, and a favorable interest rate environment, now is a great time to review your current arrangements. Feel free to contact Bernadette to discuss your requirements.