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The New Zealand government has passed a new law that restricts the amount of high LVR loans a bank can offer.
Yesterday, the New Zealand government announced that from 1 October 2013, the nation’s banks will not be allowed to have more than 10 per cent of their new approvals with a loan to value ratio greater than 80 per cent.
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The decision sparked outrage, with Harcourts New Zealand arguing that first home buyers will be penalised by the LVR restrictions.
Harcourts New Zealand chief executive Hayden Duncan said the restrictions will have no impact on the real housing issue of low supply.
“It is not high loan-to-value ratios, or first home buyers, who are causing property prices to rise. It is simply the fact New Zealand, and particularly Auckland and Christchurch, do not have enough housing stock to meet the demands of our population and investors,” Mr Duncan said.
But while first home buyers are expected to struggle under the new laws, the decision represents a good opportunity for the nation’s non-bank lenders.
Mortgage Express chief executive Marcus Williams said there has already been strong interest from second-tier lenders to assist clients to meet the new requirements through caveat lending.
“Although this will make it more difficult for first home buyers, there are ways to meet the new LVR restrictions,” Mr Williams said.
