News

BNZ has further toughened its lending criteria

It will not lend money to owner-occupiers who do not have at least a 20% deposit. An exception will be made for newly-built property.

Monday, November 22nd 2021

This programme amplifies existing restrictions. Since November 1, banks have been able to lend only 10% of their total lending to properties with an LVR of less than 20%.

That rule meant lower LVRs could still be applied in some cases, to wealthy individuals, for example, as long as the 80% rule applied on average.

But the BNZ has now extended that principle to everyone.

“Customers who are buying an existing property as an owner-occupied home will now require at least a 20% deposit across the board,” the bank said.

“We continually review our lending policies and we’ll work with any affected customer to help assess the different options they might have.

“BNZ continues to lend on new-build homes with at least a 10% deposit.”

An exemption will also be made to in-progress applications which already had a conditional loan approval certificate by December 18.

Meanwhile, Kiwibank earlier adopted a similar practice.

It said Kiwibank was empathetic to the challenge faced by first home buyers.

But it also acknowledged the desire of the Government and the Reserve Bank to address strong housing market dynamics.

“The demand for over 80% LVR lending has been, and continues to be, very strong, so we are actively having to balance the lending we have already approved with pre-approvals to ensure ongoing compliance with our Conditions of Registration.” Kiwibank said.

“This means for the time being, Kiwibank is unable to accept pre-approval applications over 80% which do not meet the regulator’s exemption criteria.”

These exemptions apply mainly to new builds.

Meanwhile the Auckland mortgage broking firm Squirrel thinks this move by the two banks will be of limited duration. 

“It's just transitory,” said the company chief executive John Bolton.

“Both of these banks have been caught out by having too many low deposit pre-approvals at a time when the rules are changing.

“So they are just going to have to slow down a lot more because they were going so fast before hand.”

Bolton said the move was only temporary, and would last for only two or three months. 

“This change is being made just so that they don't breach the cap.”

Comments

No comments yet

Heartland Bank - Online 1.85
HSBC Premier 2.19
HSBC Special 2.25
Kainga Ora - First Home Buyer Special 2.25
China Construction Bank Special 2.65
TSB Special 3.29
SBS Bank Special 3.45
The Co-operative Bank - First Home Special 3.45
ICBC 3.49
Resimac 3.54
First Credit Union Special 3.59
Heartland Bank - Online 2.35
HSBC Premier 2.45
China Construction Bank Special 2.65
Resimac 3.89
TSB Special 3.94
SBS Bank Special 3.99
ICBC 4.05
First Credit Union Special 4.09
ASB Bank 4.15
AIA 4.15
The Co-operative Bank - Owner Occ 4.35
China Construction Bank Special 2.99
HSBC Premier 3.19
Resimac 4.29
SBS Bank Special 4.69
TSB Special 4.70
Westpac Special 4.95
China Construction Bank 4.95
ICBC 4.95
The Co-operative Bank - Owner Occ 4.99
BNZ - Classic 4.99
Kiwibank Special 5.15
ANZ Blueprint to Build 2.03
Heartland Bank - Online 2.25
ASB Back My Build 2.29
Resimac 3.39
Select Home Loans 4.09
Bluestone 4.09
Kiwibank 4.25
Kiwibank Special 4.25
Kiwibank - Offset 4.25
ICBC 4.25
China Construction Bank 4.49

More Stories

Auckland market turning for investors

Thursday, January 20th 2022

Auckland market turning for investors

Weaker prices for houses, particularly in Auckland, could mean the start of the long-anticipated downturn in the market.

Cracks appearing in housing market

Tuesday, January 18th 2022

Cracks appearing in housing market

A mortgage is not just getting more expensive as interest rates rise. A mortgage is now hard to get full stop, says Jarrod Kerr, Kiwibank chief economist.

Minister orders enquiry into CCCFA

Friday, January 14th 2022

Minister orders enquiry into CCCFA

Minister of Commerce and Consumer Affairs David Clark has acknowledged concerns with the CCCFA and ordered an enquiry.

CCCFA “not understood” by politicians

Monday, January 10th 2022

CCCFA “not understood” by politicians

The ACT Party believes the Credit Contracts and Consumer Finance Act (CCCFA) was not properly understood when it went through parliament and is now asking for a review.