NZFSG's Bruce Patten
Banks across the board have tightened their criteria for new borrowers, putting a strain on home buyers in the wake of Covid-19.
Advisers report Westpac was the last big bank to stop taking on new borrowers over 80%, changing its strategy last week. In most cases, customers are stuck with their existing bank, with no option to shop around.
Lenders are shying away from higher LVR borrowing and focusing on existing customers and processing hardship and deferral requests, advisers say.
"Literally no-one is doing over 80 new to bank at the moment, but it will open up again," says NZFSG's Bruce Patten. "But once the banks are comfortable with the housing market they will be all over them again."
"The banks are having too many problems dealing with new to bank clients at the moment, and want to support existing clients.
"They have enough work processing clients to interest-only and payment holidays. The staff also have their hands full with reduced hours," Patten adds.
Brokers report banks are also getting tough on increasing debt on existing customers.
Glen McLeod of Edge Mortgages is attempting to find a lender who will do 90% LVR for an owner-occupied property. The client already has an investment property but wants a home to reside in.
"That is where it is definitely getting quite difficult. I’ve spoken to a number of lenders and they will not take on a 90% under occupied loan where the client already has an investment property. Adding in the fact that over 80% requires existing customer status makes it extremely difficult."