New LVR Restrictions Explained

Friday 19 November 2021, 10:44AM
By Media Giant

As of the 1st of November 2021, The Reserve Bank of New Zealand (Te Pūtea Matua) has implemented new restrictions on lending. These will affect any person looking to borrow money for a property purchase, and should be understood by all prospective mortgagees, Wellington-based Hayman lawyers explains.

As of the beginning of this month, lending banks must maintain a Loan-to-Value Ratio (LVR) of 80 per cent on 90 per cent of all new owner-occupier lending, and an LVR of 60 per cent on 95 per cent of all new investor lending. This significantly limits the numbers of home buyers or investors who will be able to buy without deposits of at least 20 per cent and 40 per cent respectively.

New measures are intended to guard against the risk of a housing market correction which could leave borrowers underwater on their loans. For some buyers, the measures increase the initial hurdle to obtaining a mortgage as opportunities to buy with a smaller-than-average deposit will be reduced.

Wellington-based Hayman Lawyers have more than 20 years of experience helping Kiwis buy and sell property, and can provide expert guidance and advice for anyone navigating these new restrictions. To get in touch with the team, email or call 04 472 0338.