Originally posted by Chris W
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What are you seeing with the bank financing environment?
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Originally posted by AlexL View PostHi Murph
Is the loan from the bank conditional on you getting a fixed price contract from your builder?
I'm interested in this as I've heard if you are short on equity/cash, banks will be willing to borrow you the construction amount if you have fixed price contract - and everything else adds up (valuation etc.)
Yes fixed price contract as to be received and accepted by the bank
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Originally posted by Learning View PostThe bigger ($500k) of the two is IO the smaller ($250) P&I. 62% averaged LVR so shouldn't be a problem if I need to shop around.
Ive currently got 1.3m on IO with 50% LVR
So once the development is done I think I will be closer to 44% LVR
Im tossing up putting most of it PI.
I would have various fixed terms for security... Say 1, 2 ,3 and the majority on 5.
I would have a revolving loan at about 100k as this is what I can pay down in a year from our business.
So after a year once the Revolving credit account is close to zero we will let the first 1 year fixed roll over and pay that off over the next year etc.
Murph
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With banks getting tight on debt servicing criteria for extending the maturity of interest only loans, it might be worthwhile for long term buy and hold property investors to check if they meet current debt servicing criteria with the big banks before their interest only period term expires.
I can only find these online calculators for 2 banks - Westpac and BNZ. Does anyone have links to online calculators for the others (which includes rental income from investment properties)? I can only find online calculators which do not include rental income for Kiwibank, ANZ and ASB.
I am looking at borrowers who are classified by banks as retail borrowers, and not classified by banks as business or commercial.
Westpac - https://www.westpac.co.nz/home-loans...-can-i-afford/
BNZ - https://www.bnz.co.nz/personal-banki...h-can-i-borrowLast edited by Chris W; 08-11-2017, 12:05 AM.
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Has there been any focus on LOCs? Are they still okay to use etc. e.g. if set up a couple of years ago and not used yet but intend to use soon - do you think there'd be any reason to doubt getting access to the funds etc?
cheers,
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September 2017
Banks tighten home lending for older borrowers
Banks are being more cautious about issuing home loans that would leave borrowers making repayments after the age of 65.
Last edited by donna; 24-01-2018, 04:41 PM.
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They have done all this before. Once it was 55 then 60 but it come up against the Age discrimination Rules of our Law.
The issue really is that the Banks are making far to much money to easily at present and their margins are double what they were 6-7 years ago. We can thank Ralph Norris for teaching them that they can get away with that.
But the worm turns and soon they will begin to wonder what they are going to do with the cash in the bank and no income to pay any interest or big fat salaries.
Roll on the day.
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Looks like APRA is getting tighter on the Australian banks - potential flow on effects for their NZ bank subsidiaries.
Housing - The importance of solid foundations
WAYNE BYRES
Chairman
21 November 2017
Keynote address at the Australian Securitisation Forum 2017, Sydney
APRA’s program of work in relation to housing-related risks
It is no secret we have been actively monitoring housing lending by the Australian banking sector over the past few years. Throughout this period, our efforts have been directed at reinforcing sound lending standards in the face of strong competition that, in our view, was producing an erosion in lending quality just at a time when standards should be going in the other direction.
Housing loans represent over 60 per cent of total lending within the banking sector. Our goal has been to ensure APRA-regulated lenders are making sound credit decisions which are appropriate, individually and in aggregate, in the context of broader housing market and economic trends. We have consistently called out a number of factors that are contributing to an environment of heightened risk, many of which have been with us for quite some time now.Last edited by donna; 24-01-2018, 04:40 PM.
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Latest from mortgage brokers squirrel.co.nz
New year, but more of the same?
The new year is almost upon us and with it comes the usual new year’s resolutions which may or may not end up becoming reality. Resolutions aside, the new year brings with it some fresh changes to the RBNZ lending restrictions which in my opinion will have very little impact on the housing market. There’s been plenty of opinions about what these changes mean and social media groups have been jam packed with “experts” giving theirs. So, what will these changes mean and what would I be doing as an investor heading into 2018?
Last edited by donna; 24-01-2018, 04:42 PM.
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Seems like tightening lending criteria by the big 4 banks in NZ (which are Australian owned) are resulting in borrowers going elsewhere for their financing solutions.
"He said a lot of borrowers had been told no by one or more banks and then decided to go to a broker which had led them to a finance company.
Tighter home loan restrictions on the banks saw non-bank mortgage lending boosted from $1.61b to $2.05b over the year.
.... Gross loans and advances across the sector were up close to 14 per cent, nearly double the 8 per cent growth in the banking sector."
Last edited by donna; 24-01-2018, 04:42 PM.
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Out of Australia - which could have an impact on the NZ owed subsidiary banks of the Australian banks.
["Walter Nanni, an associate at buyers agents Cohen Handler, said some banks were increasing rates on interest-only loans overnight"
"While this is most clearly seen with specific banks, I'd expect others to follow in due course, contributing to a more challenging landscape for investors," he said.]
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From mortgage broker at squirrel.co.nz - tight bank criteria still in place
"Much will be made of the foreign buyer exclusion, but as I’ve said before, it’s a complete red-herring. Foreign buyers were never the issue, it was residents buying with deposit funds from offshore. Capital controls in China have slowed the transfer of funds, but the biggest impact has been tighter bank criteria, particularly around income. It is these latter points that will limit Chinese buyers in 2018. "Last edited by donna; 24-01-2018, 04:43 PM. Reason: if you want to link to a broker website do it in the caveat emptor forum
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From squirrel.co.nz
"Despite this increased confidence and activity, bank credit policy continues to play its part. Borrowing is the most difficult I have seen! The responsible lending code – and banks’ interpretation of that – is by far the hardest to get around. Test rates remain high, meaning maximum borrowing is sitting at somewhere between 5 and 6 times income, whilst property values are up around 9 times in Auckland and 6 times outside of Auckland. Even the non-banks aren’t so straight forward anymore.
Individual credit policies continue to differ widely across banks so I’d be making sure that split banking is part of your investment strategy. In this market, having everything with one bank is madness and the more properties you have the more banking relationships you should have. The biggest problems for investors I’m seeing at the moment are where they are selling property and they’re with one bank across their whole portfolio. "
Full article:
When the LVR restrictions came into play in 2013 they had a reasonable impact on the housing market and borrowers in general. However, whilst the market slowed for a few months, buyers soon found ways around the rules and the craziness continued. It wasn’t really until the changes in late 2016 - which removed the use of overseas income and increased investor deposits to 40% - that we started to see a turn. As a result, 2017 was a significantly slower year in certain parts. Maybe not across the country or even Auckland in its entirety, but certainly in parts. JB’s article late last year - Welcome to Auckland’s Growth Party - covered this off in respect of GDP but it was also very much the case for the housing market.
Confidence fell out of the market last year and whilst some areas didn’t feel the impact, others such as South Auckland certainly did. That confidence appears to be coming back this year off the back of the RBNZ easing the restrictions on LVR, and possibly people’s new year resolutions coming to fruition! The RBNZ has indicated that this easing will continue, so with that I’d expect to see the market continue to remain strong. I don’t think house prices will continue to climb as we’ve seen in recent years, but I absolutely think they will hold strong.
Vendor expectation has come back a bit and buyers are starting to find properties within their budget. And they’re finding them quickly. We’ve started the year with significantly more enquiry than we were seeing in the last 6 months of 2017, and more than that, the enquiries are from people who either already have a property under contract or have one that they want to put an offer on.
Despite this increased confidence and activity, bank credit policy continues to play its part. Borrowing is the most difficult I have seen! The responsible lending code – and banks’ interpretation of that – is by far the hardest to get around. Test rates remain high, meaning maximum borrowing is sitting at somewhere between 5 and 6 times income, whilst property values are up around 9 times in Auckland and 6 times outside of Auckland. Even the non-banks aren’t so straight forward anymore.
Individual credit policies continue to differ widely across banks so I’d be making sure that split banking is part of your investment strategy. In this market, having everything with one bank is madness and the more properties you have the more banking relationships you should have. The biggest problems for investors I’m seeing at the moment are where they are selling property and they’re with one bank across their whole portfolio.
In saying that, a recent article by ANZ suggested the bank funding gaps are closing, which has ultimately been the goal of the banks’ restricted lending criteria. Banks are required to be more self-funded rather than borrowing off-shore. It went on to suggest that this could result in a more competitive lending environment. I’m not yet seeing this but it’s still early days so fingers crossed. Couple this with the increased activity and we could be in for a bumper 2018!
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Perhaps access to a substantial revolving credit loan is the answer ? This way you are not constantly having to approach a bank, cap in hand for lending approval regarding any new investment you are considering - an investment opportunity may happen months or even years down the track - the lending facility is already in place. .
This is also advantageous to both buyer and seller in being able to present attractive cash unconditional offers to vendors .Last edited by mrsaneperson; 16-02-2018, 08:07 AM.
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Big banks are moving away from revolving credits as they aren't making the margins they want.
Chinese banks I heard have somewhat a bit more relaxed servicing requirements compared to Aussie banks, but need to work with a good broker as they can be temperamental at times.
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