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 in all but one of New Zealand’s 15 regions increased year-on-year in November, according to Trade Me Property’s latest data.
Investors who are wondering what 2018 will hold in the commercial property sector might find some clues in Colliers International New Zealand’s latest list of predictions.
New Zealand’s lower economic growth was acknowledged by the Reserve Bank in its OCR statement today – which means there's a chance their next call could be more doveish.