Three major bank lenders introduce property investor lending restrictions early

Thursday 21st July 2016

ASB Bank and ANZ Bank New Zealand have followed Westpac Banking Corp's lead in clamping down on lending to property investors by requiring at least a 40 percent deposit ahead of Reserve Bank restrictions.

Westpac made the same move yesterday after the central bank said earlier this week it intends having the new lending restrictions in force by Sept. 1 and asked lenders to comply with the spirit of the new regulations immediately. These regulations extend and expand the demand for a 30 percent deposit on investment properties in Auckland introduced by the bank last year.

ASB said existing approvals and pre-approvals above the new 60 percent loan to value ratio would be honoured until their documented expiry date.

ANZ, the country’s biggest lender, said today that its maximum loan to value ratio of 60 percent for property investors will apply across New Zealand. It was previously 70 percent for Auckland. It's also extended the 85 percent ratio in Auckland owner-occupied homes across New Zealand.

The bank said it intends honouring all existing pre-approvals but any renewals will be subject to the new policy.

It said in a statement the changes were “a sensible and responsible response to market condition

The move follows comments yesterday by the bank’s chief executive David Hisco that property prices in Auckland were over-cooked and the ending of the property boom will be “messy”.

He warned baby boomers who have become property investors are starting to see more and more rentals where the owner can't find a tenant or the rent doesn't cover the mortgage. He said "it's a matter of when, not if, the market adjusts".

Hisco said the central bank needs to go further and demand 60 percent deposits, which "will be unpopular amongst investors but it may end up doing them a favour" and mean less business for the banks.

BusinessDesk.co.nz

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