Reserve Bank Restrictions
You have probably all read about the Reserve Bank plans to introduce further changes around Loan to Valuation (LVR) restrictions. Best summarised as follows:
* No more than 5 per cent of bank lending to residential property investors across New Zealand would be permitted with an LVR (loan-to-value ratio) of greater than 60 per cent (ie a deposit of less than 40 per cent).
* No more than 10 per cent of lending to owner-occupiers across New Zealand would be permitted with an LVR of greater than 80 per cent (ie a deposit of less than 20 per cent).
* Loans that are exempt from the existing LVR restrictions, including loans to construct new dwellings, would continue to be exempt.
Even though these rules are not confirmed or in force yet (6 weeks away) some of the major banks have already amended their criteria to reflect these possible changes.
We will keep an eye on this and advise changes as they happen. But in the meantime if you have any questions please don't hesitate to contact us.