Good news for homeowner hopefuls – LVR restrictions may soon lift
Since the LVR restrictions were introduced recently, many people have been feeling like they have no hope of getting a foothold on the property ladder – after all, scrapping together a 20 per cent deposit or more is beyond the means of most people!
Luckily, that could all change with the news that the LVR restrictions may be removed soon.
In a speech on the 9th of May, Deputy Governor of the Reserve Bank, Grant Spencer, said, “The volume of house sales has dropped considerably across the country, other than in Canterbury, and the slowdown in volume has also been reflected in prices. Without the loan-to-value ratio restrictions (LVRs), introduced in October 2013, annual house price inflation might be running some 2.5 per cent higher,” Mr Spencer said.
Key things the Reserve Bank would be watching before they remove LVR restrictions:
- Impact of increasing interest rates
- Net migration figures
- The pace of construction, especially in Auckland and Christchurch
- The strength of the NZ Dollar.
Mr Spencer continued, “We’ve stated that the LVRs are temporary, but before removing them we want to be confident that the housing market is responding to interest rate increases; and that immigration pressures are not causing a resurgence of house price pressures. It will take some time to gain this assurance. At this stage we consider the earliest date for beginning to remove LVRs is likely to be late in the year.”
Remember that even with the LVR restrictions in place, it’s still possible to get a loan of up to 90%. Therefore you can still get in touch if you have a 10 oer cent deposit, or if you have parents who are willing to act as guarantors.
Time to negotiate!
It’s important to negotiate the interest rates that are published by banks (even ones you’re already with), because you can often get a better deal than what’s being advertised – and that could save you thousands of dollars.
There seems to be a big disparity between carded / published rates and those rates available to our clients. For example: ANZ’s 3 year fixed rate is 6.85%, but you can get a 3 year fixed rate from ASB for 6.25%. This is a massive difference and you would certainly feel aggrieved if you decided to take up ANZ’s 3 year rate at 6.85%.
Over the last 6 weeks we have noticed the rates increase and then more recently decrease. I am not even talking about published rates, but rather the rates we are able to negotiate for our clients from the banks. In other words, their margins have changed quite a bit but their published rates have not changed that much.
So, where does this leave you? How much should you negotiate for? How do you know you have done a good job negotiating? It’s always hard to tell, as rates can vary so much. As we are doing it every day for our clients and at no cost to them, why not get us to negotiate on your behalf the next time your rate comes due? You’ve got nothing to lose and you might be surprised to see what is available in the market.