ANZ will increase the deposit of real estate loans for investors to 30%

A second major bank says it will increase deposit requirements for investors to buy properties from 20% to 30%.

ANZ, New Zealand’s largest bank, will bring the highest deposit rate from December 7 and comes after rival bank ASB announced yesterday that it would immediately increase the requirement to 30 percent for investors.

On Wednesday, the Reserve Bank said it would consult on the recovery of loan-to-value restrictions as of March 1. LVRs restrict how much banks can lend to low-deposit borrowers.

It withdrew the LVRs in May for a year to ensure that banks could go ahead with the mortgage deferral scheme implemented due to the Covid-19 pandemic and to ensure that credit continued to flow to the market.

But an unexpectedly booming housing market has received calls from economists for restrictions to be reinstated sooner.

Ben Kelleher, ANZ NZ’s personal CEO, said the bank had been closely monitoring the impact of low interest rates and reduced LVR requirements in the residential real estate market.

“It is in everyone’s interest that residential property prices are sustainable in the long term and that home ownership is accessible to as many Kiwis as possible.”

Kelleher said in October, which was a record mortgage month for ANZ, with 31 percent of its home loan commitments going to real estate investors, while 19 percent went to first-time home buyers.

“Today we have made the decision to increase the deposit required by real estate investors to 30 percent, up from 20 percent today for new home loan applications as of December 7.

“As a responsible lender, it is important to us to help clients make good borrowing decisions and for clients to have a level of indebtedness that they can comfortably repay. Covid-19 has made the housing market and loan decisions more complex. , and we believe that the steps we can take to increase balance and sustainability in the market is the right thing to do.

Other banks have yet to introduce a hardline raise.

A Kiwibank spokeswoman said she would “act in the spirit of the Reserve Bank’s direction while ensuring that clients can make a proper transition to the new environment.”

“Kiwibank continues to take its responsible lending obligations seriously to ensure that all lending decisions are in the best interest of the client and appropriate to their individual circumstances.”

A BNZ spokesperson said its pricing and credit settings were still under regular review, but that it had no changes to announce at this time.

“The elimination of LVR has provided welcome additional flexibility and low interest rates have helped build confidence through increased power in the market.

“BNZ always takes a prudent approach when making loans to ensure that people are in a position to repay their loans, even without RBNZ’s LVR restrictions. We believe clients should have some equity in their homes to make sure they are okay. positioned given the ongoing economic uncertainty from Covid-19. “

Gina Dellabarca, general manager of consumer and wealth banking at Westpac NZ, said she never changed her loan setup and stayed in line with previous LVR rules.

“We have remained open for business in all segments and have increased our support for housing, agriculture and business clients over the past year.”

Under previous LVR rules, banks could only make 5% of new loans to investors with a deposit of less than 30%.