80% Investment Window is Closing

In April this year the Reserve Bank removed the Loan to Value (LVR) lending restrictions that applied to banks and lending institutions on residential property effective from 1st of May for 12 months.

This move saw BNZ, ANZ, ASB and Kiwibank move to allow up to 80% loans for investment property. Westpac remained the outlier, not changing their credit policy to remain at 70% LVR.

Last Wednesday the 11th of November the Reserve Bank announced it would hold consultation in December on whether to reinstate LVR restrictions, and if it did, they would take effect from 1 March 2021.

This announcement comes as the fastest growing residential lending segment comes from low-deposit borrowers. While this is of concern to the government, this isn't actually of immediate concern to the Reserve Bank who see rising house prices as providing a necessary wealth effect to support the broader economy.

This messaging however has been taken onboard by NZ’s largest home lenders.

ASB amended their investor lending policy to a maximum 70% LVR with immediate effect Friday 13th november.

ANZ amended their investor lending policy to a maximum 70% LVR with effect from 7th December 2020.

To date BNZ remains the last major bank to amend their investor LVR credit policy in response to this announcement.

Key Messages:

  • ASB and ANZ will honour pre-approvals at 80% Investor LVR.
  • Main bank (lower interest rate) options still exist for 80% LVR but are quickly closing.
  • 2nd tier lender (slightly higher interest rate) options exist for 80% LVR outside of main banks.

If you’ve been considering property as a better investment vehicle for your funds, or considering using the available equity in your home to invest, the removal of LVR restrictions has made it a great time to purchase and you may wish to expedite this decision before this funding window has closed.

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