ANZ says it has been able to lend more to low-deposit investors thanks to the Reserve Bank easing lending restrictions.
Photo: RNZ / Nate McKinnon
New Zealand’s biggest bank is opening the doors to low-deposit lending for property investors.
Lending to investors has been heavily restricted by loan-to-value restrictions recent years.
But from 1 December, the Reserve Bank eased the rules, allowing banks to lend up to 10 percent of their new lending to investors with a deposit or equity of less than 30 percent.
Previously it had only allowed 5 percent to be at this level. This was effectively zero in practice because banks did not want to risk exceeding the limit.
Restrictions on owner-occupiers also eased in December, allowing more lending to borrowers with a deposit of less than 20 percent.
Reserve Bank data shows the amount of low-deposit lending increased in December, after the change took effect.
In November, there was $1.178 billion of lending to borrowers with less than a 20 percent deposit, which lifted to $1.295b in December.
Lending to those with a deposit of less than 30 percent increased month-on-month from $4.346b to $6.765b.
ANZ said it had been able to lend more to low-deposit investors thanks to the changes.
“A limited amount of residential property lending is currently available with a minimum deposit of 15 percent.
“Because the Reserve Bank loan-to-value settings still only permit a relatively low level of these loans, we do regularly change our settings to manage demand and ensure we comply with Reserve Bank rules.”
Kelvin Davidson, chief property economist at Cotality, said it was unlikely to transform the housing market.
Lower mortgage rates helped investors, he said, and the return of interest deductibility was also in their favour.
“But I just think there’s also a degree of caution out there because even though top-ups might be smaller than they would have been a year or two ago, they’re still chunky enough for people to have to put in [money] every week.
“There are concerns about higher council rates, higher building insurance. flat rents, debt-to-income ratio restrictions kind of lurking in the background.”
He said there was also likely to be caution about the election and the possibility of a capital gains tax in future.
“I detect a sense among investors, maybe an older generation, that they’re not necessarily banking on such strong capital gains in future as they’ve had in the past.
“That might be causing a bit of a mindset change and people being a bit more cautious about investing in property.”
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