The fog has cleared on LVR restrictions
The new loan to value ratio (LVR) restrictions are the talk of the town this week with the Reserve Bank of New Zealand (RBNZ) making the call to change restrictions in January next year.
Does this mean the red tape has finally been loosened for investors? Not quite. Currently, the percentage of first home buyers getting loans has increased compared to investors which have seen a decline.
But the future looks promising with RBNZ Governor Adrian Orr saying; “the central bank would further relax LVR rules in the coming years.” His comments come as interest rates are at a low and housing growth has slowed.
So what are the changes?
Here is what applies from January for new loans only:
1. Banks will be able to provide 20% of their owner-occupier loans to borrowers with a deposit of less than 20% (up from 15%)
2. Lenders will be able to allocate 5% of new investor loans to borrowers with less than a 30% deposit (down from 35%)
Let’s cut to the chase, what does this mean for your clients?
There is an opportunity! If you are talking to an investor who has been struck down by a bank or lender in the last few years, give me a call and we can see what’s possible to help them, with our panel of over 20 banks and lenders.