Reserve Bank Macro-Prudential Tools

[Leftette]

No big deal. As far as I know the UK banks charge a premium on your FIRST investment property, so its not a unique NZ-only thing.

[Bluekiwi]

NZ Property Investors Federation.

http://www.nzpif.org.nz/news/view/56355/

[Leftette]

I wonder what happens if one of your 5 is a holiday home that will have the new mixed-use rules applied to it? Gets rather complicated to apportion the higher rate of mortgage on this property to the days you rent it out per year!

[Davo36]

They make a good point at the end re the amounts involved. You could have little borrowing over 20 properties and be caught in this, but not be caught with heaps of borrowings over 4 properties.

Typical bureaucratic rubbish as far as I'm concerned.

[speights boy]

That article, I must say, is more measured than his initial quote to the reporter.

While it could be a hassle and costly to change lenders, King said it would still be simple enough to skirt the rules.

"It would be very easy to get around it.
You could even set up different entities; trusts and companies," he said.

"It'd be very hard to prove something like that

[speights boy]

The NZPIF does not believe that this is an appropriate way to classify risk between different loan types and that the change will unfairly discriminate against many rental property owners.
As an example, how is a person who owns 4 properties worth $4,000,000 and debt of $3,600,000 less of a risk than another person with 5 properties worth $1,000,000 and debt of $200,000?

A good question.
Targeted LVRs for investors has been mentioned has it not ?

[Leftette]

Heaps of mort over 4 versus little over 5 is a problem fro the designers of this law. I guess they have to draw the line somewhere, but I would rather it was done on a sliding scale of equity, much like the higher rates if you borrow over 90% (or whatever it is). Or just apply the higher rates to EVERY rental.

[speights boy]

Yes, if would have had a far greater effect if the RBNZ had chosen option one.
The majority of landlords will not be affected by them going with option 2.

[mortgage broker]

The actual Reserve Bank paper is here and my summary here

[speights boy]

- generally banks will lend approx 65% over a 15 year term with any amount greater than 65% placed on a shorter term.

Add in the interest rate premium, plus an OCR rise.....
.....Ouch !

[Wayne]

commercial is a bitch!
Generally prices on each instance as they feel - ie don't look up a web site and take it from there.
You have no idea where you are until the bank decides how they feel about you, your proposal and the state of the moon.

[speights boy]

How will this affect the availability of high LVR loans ?

By that I mean:
if a number of these loans that are moved across from residential to commercial are low equity loans, does that free up the bank to offer more low equity residential loans ?

[drelly]

Limiting borrowing to 65% over 15 years and being hit with a higher rate is just plain nasty! Perhaps time to revisit the "What would you do if you didn't invest in property" thread???

[speights boy]

Or, be content with a few million as opposed to needing 10 mil.

[drelly]

Or, be content with a few million as opposed to needing 10 mil.

I can't get a decent superyacht on only a few million!
The annoying thing for me is a few houses in Whangarei is not the same as a few houses elsewhere! If they don't bring in actual dollar limits, then I'd be better off selling and re-investing in less houses in Auckland.