The festive season is off to a roaring start with exciting news that the Reserve Bank will ease LVR (Loan to Value Ratio) restrictions by January 1, 2018. Long-suffering deposit savers finally have something to rejoice about as this should get people into their first home faster, with potentially a smaller deposit required.
Reserve Bank Governor Grant Spencer states off the back of the November Financial Stability Report that New Zealand’s financial system remains sound and risks to the system have reduced. Couple this with impending new housing market policies that are expected to dampen the market, and you can see why the time is right for them to begin relaxing the restrictions.
The new LVR restrictions will require that:
No more than 15% (currently 10%) of each bank’s new mortgage lending to owner-occupiers can be at LVRs of more than 80%
No more than 5% of each bank’s new mortgage lending to residential property investors can beat LVRs of more than 65% (currently 60%).
The bank may make further LVR adjustments further down the track if financial stability risks stay contained, but will remain cautious and be watching closely to gauge the impact of these changes to reduce the risk of a resurgence in the housing market or deterioration in lending standards.
But the great news for eager buyers is that early in the New Year 50% more first-home buyers with deposits of less than 20% should now get mortgage approval from their bank. Investors will only need to cough up a 35% deposit, as opposed to the 40% it is currently, checks this ONLINE LОАNЅ FOR BAD CREDIT – HОW CАN THЕЅЕ HELP YОU? which could make a difference to the amount of cash you can hang onto when you sell up.
This change could potentially see a flood of new applications, though, so now’s the time to start planning and talk to your broker to get in before the crowds. If your income is strong and you have at least a 10% deposit, or you’re interested in an investment property or beach bach to make the most of summer, come and chat to us to see what we can do to help you.
No time like the present (Christmas pun intended!) to get things started and be part of that 15% who will get into their new home sooner rather than later.
Cheers to a great week, everyone!