Bridging the finance gap

Friday 10 March 2017

It’s no secret that banks are taking a much tougher line on lending to property investors and developers these days.

Where previously they would have been willing to back a deal, now it is becoming much more common for applications to be declined.

That is in part due to the Reserve Bank’s crackdown on loan-to-value restrictions (LVRs).

It is nearly impossible for mainstream banks to lend more than 60% of an investment property’s value, unless the property is a new build or an investor is conducting remediation work.

Glenn Stevenson, head of mortgages at ANZ, says the bank is still lending to investors but the LVR rules have drawn a line in the sand, ruling out a chunk of the market.

He says frontline staff have noticed a big impact on the investor market.

In addition to that, there are requirements for banks to hold increasing amounts of capital against residential investment lending.

And this, along with rising interest rates, means borrowing is more expensive for those who have enough equity to get across the line, Stevenson says.

“Gone are the days of discounts in line with what an owner-occupier might be able to get.”

So what are the best options for investors trying to find a loan when banks are bound by LVR rules and increasing capital requirements?

To find out more, click here to get the digital issue of NZ Property Investor magazine.

Subscribe to NZ Property Investor magazine here to get great stories like this delivered to your mailbox every month.

Comments from our readers

No comments yet

Sign In / Register to add your comment

House Prices

Price decline continues - TMP

Asking price growth nationwide continues to slow new Trade Me Property data shows - and prices could fall further once the foreign buyer ban is in force shortly.


Lower vacancy rates in “green” buildings

Commercial landlords take note – “green” office buildings have clear occupancy benefits as well as being cheaper to run, a new report has found.


Reserve Bank springs surprise with dovish OCR forecast

The Reserve Bank surprised economists by signalling it may keep the OCR rate at 1.75% until 2020, pushing back its forecasts in a dovish statement this morning.

Site by PHP Developer