Real estate market: BNZ joins the rush to curb investors

BNZ has teamed up with ASB and ANZ to introduce restrictions on the value of loans to investors, ahead of new Reserve Bank rules that expire in March.

BNZ announced today that it was reverting to its pre-Covid-19 home loan loan-to-value (LVR) setup for real estate investors.

This means that as of December 7, 2020, BNZ will require a minimum deposit of 30 percent from investors in residential properties.

That means the top four banks now have their investor lending policies back to where they were before Covid, when the Reserve Bank’s restrictions were still in effect.

On November 11, 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.

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

Westpac has said that it never changed its loan settings 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,” said a spokesperson.

The housing price boom of the past two months has put pressure on the government and the Reserve Bank to act, with many blaming low interest rates for the latest increase.

Earlier today, Finance Minister Grant Robertson revealed that he had written to the Reserve Bank to ask it to consider house prices more closely in its monetary policy arena.

LVR and fall under the Reserve Bank’s financial stability mandate.

Tomorrow, the RBNZ will deliver its latest Financial Stability Report which will include an assessment of how much risk it sees in current levels of mortgage debt.