Rethink Group Advise LVR Restrictions Eased As From 1 January 2019

Thursday 24 January 2019, 3:27PM
By Beckie Wright

Craig Carter from Rethink Group advises, “On 29 November the Reserve Bank eased the LVR restrictions further which are effective 1 January 2019. This means that the banks from 1 January, will be able to lend up to 20% of their overall loan book to first home buyers with a low deposit (less than 20% deposit). Property investors get some relief too.

“Deposits required to buy an investment property are currently set at a minimum of 35%. From January 1, investors will only require a 30% deposit. I am currently being inundated with my investor clients wanting to top-up their current mortgages to release that further 5% across their portfolio, as that then means they will have a 30% deposit to purchase another one”. Craig says he is also anticipating a surge of first home buyers in the market in January with more money available for low deposit home loans.

Both mortgage credit growth and house price inflation have eased to more sustainable rates, reducing the riskiness of banks’ new housing lending. In response, they are easing their loan-to-value ratio (LVR) restrictions on banks’ new mortgage loans. If banks’ lending standards are maintained they expect to further ease LVR restrictions over the next few years.

Reserve Bank loan-to-value ratio (LVR) restrictions on new mortgage loans.

From 1 January 2019:

Up to 20 percent (increased from 15 percent) of new mortgage loans to owner occupiers can have deposits of less than 20 percent.

Up to 5 percent of new mortgage loans to property investors can have deposits of less than 30 percent (lowered from 35 percent).

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