LVRs Under Review by the RBNZ

[Davo36]

17% for me. And if I include the house, maybe 11%.

I guess I'm pretty conservative!

[Nick G]

But you're missing the chance to leverage up?!

[Wayne]

But you're missing the chance to leverage up?!

Is that always necessary?
Maybe enough is enough - depends on your plan.

[invamped]

LVRs Under Review by the RBNZ

Hello,

I was hoping some people here would be able to help me understand some LVR stuff

I have recently done a new build with a 90% High-LVR loan. The build has been completed and valuation came back 80k above costs.
My original intentions were to move into this our making it my PPR. However, my plans changed and I'm now wanting to buy here in Auckland.
I'm currently talking with my bank regarding borrowing for the new Auckland owner-occupied home and they are requiring 40% LVR on the original new build.
Meaning I have to use the equity in the new house and a large deposit of over 20%.

My understanding was we were exempt from LVR restrictions on new builds, re-financing an existing high-LRV loan and owner-occupied properties? Also, with my original intentions of making the new build owner-occupied I thought the meant if I bought a new owner-occupied house without selling the new build it wouldn;t be held to LVR rules and I would only require the 20% deposit and 80% LVR.

What's the deal?

Thanks guys

[Learning]

I'm not 100% sure but my understanding is new builds and owner occupied require 20% deposit (though banks can make exceptions for certain cases). Investment properties require 40% deposit.

Looks like you snuck on to the exception list for your new build but now it's completed and your going to make it an investment property it requires the 40% deposit. Your circumstances have changed, ie. you now have some equity in the new build, so you've fallen off the exception list and a 20% deposit is required for a new owner occupied purchase.

[invamped]

The bank is asking for 40% deposit on the new owner-occupied house though? Or at least 40% across the two properties. My understanding is the first property being new build can be at 80% LVR and stay that way. Then the new house will be owner-occupied so again should be a 20% deposit?

[Anthonyacat]

Go to another bank for the new lending. This one is being unreasonable, and they don't deserve any further business.

If a second one says no as well, talk to a broker. There's a couple good ones on the forum here, or PM me and I'll give you the details of the one I use.

[Wellington Broker]

Aha the issue here is you've created a new lending event when you've gone to borrow more money for a different purpose. Should only need 10% in most cases for a new owner-occupied property though - this can be cash or borrowed up to 60% of property value. Alternatively can look at refinance of that rental and new purchase at 80% across the board through a non-bank. There's probably an option here but hard to confirm without specifics on property value, lending and proposed new transaction

[Nick G]

LVRs under review by reserve bank

https://www.interest.co.nz/property/90809/acting-reserve-bank-governor-says-central-bank-currently-reviewing-lvr-restrictions

My hopeful theory is they are happy that the gap between deposits and borrowing is shrinking and banks lending criteria seem tighter. The government is going to introduce higher standards for rental properties in a move towards "professional landlording". That will lead some to sell their properties and a decreasing number of available rental properties for a still growing population. With investor lending down to 20% easing the LVR would offset that balance and new borrowers would have to meet the new requirements for heating and insulation etc.

Or they could just cut home buyer deposits to 10%.

[Perry]

ANZ tweaks deposit rules for home buyers
20 Dec 2017

New Zealand's biggest bank is offering some reprieve to home loan borrowers with small deposits. The Reserve Bank last month adjusted the loan-to-value restrictions that limit how much low-deposit lending banks can do.

From January, banks will be able to lend 15 per cent of their new loans to borrowers with deposits of less than 20 per cent of a property's purchase price, up from 10 per cent at the moment. They will be allowed 10 per cent of loans to investors with less than 40 per cent, from 5 per cent at present.

[Courham]

ANZ tweaks deposit rules for home buyers
20 Dec 2017

Got to love PR spin "offering some reprieve"' = more than happy to loan more to overleveraged FHB so that when it all turns to sh!t they lose the shirts off their backs- nice responsible lending.

Or is it option b: Not about them it all about our PROFITS?

Sometimes the masses need rules to protect them from themselves- as does the banking sector.

Craig

[Perry]

History Repeating Itself?

It's happened before, Craig.

Blenglish was advising restraint on household debt/borrowing and people heeded.

Also, banks clamped down on mortgage lending.

Fast forward a year or so to collapsing sales and profits, poor economic performance and declining tax revenues and both changed their tunes, very quickly.

Politicians are slow (if not retarded) learners.

It seems odd - if not sad - that banks are obviously not much better.

Their econo-mist-soothsayers should know better, shouldn't they?