The changes to the Loan to Value Ratio (LVR) restrictions on the 1st of January this year mean property investors now require only a 30 per cent deposit, or existing equity to borrow, down from the previous 35 per cent required. The changes to restrictions also make it easier for owner occupiers to borrow. While the minimum required is still 10 per cent, banks can now lend up to 20 per cent of their new lending at above 80 per cent LVR.
Adrian Orr, Governor of the Reserve Bank of New Zealand, says that risks to New Zealand’s financial system have eased over the past six months up to the last quarter in 2018, a result of the cumulative effect of a slowdown in household lending growth, reduced high LVR lending, and slowing interest-only lending rates. The changes, which should effectively make it easier for first home buyers and investors to purchase property, appear to be the start of a gradual relaxation of LVR restrictions which were initially designed to cool the housing market.
All in all, this makes it a good time to buy. Mortgage experts agree that conditions in the New Zealand property market could make it an ideal time to consider property. General Manager of Mortgage Express, David Gopperth, says, “Factors like the restrictions on foreign buyers, combined with a relatively low interest rate and little movement to the OCR expected for the course of this year, make this a good time to consider property investment.”
Despite the Reserve Bank's loosening of LVR limits, an increase in lending is not a clear-cut Outcome, and lenders may choose to continue being cautious in their approach to lending. Working with an experienced and knowledgeable mortgage adviser can make all the difference to the success of your application, so for more information on residential property management North shore, apartment management and home rental services please go to http://www.udyrealty.co.nz .