29 November 2017
REINZ surprised at minimal changes to LVRs for first time buyers
The Real Estate Institute of New Zealand (REINZ) is surprised at today’s announcement by the Reserve Bank of New Zealand
(RBNZ) which has seen Loan to Value restrictions eased for investors from 40% down to 35% but remain at the same level
(20%) for first time buyers.
Bindi Norwell, Chief Executive at REINZ says: “We’re surprised and concerned that LVRs have remained the same for first
time buyers. For some months now, the Institute has been calling for a review for first time buyers to make it easier
for them to get a foot on the property ladder.
“We constantly receive feedback from our members around the country that for many young couples, saving a 20% deposit is
just too much for them - especially when they’re already paying rent. With a median house price of $530,000 in New
Zealand, this means a deposit of $106,000 is needed. In Auckland, with a median house price of $850,000, this is a
deposit of $170,000.
“While it’s important to get the balance right between responsible lending and saving a deposit, it’s also imperative
that individuals don’t become over leveraged – particularly if interest rates go up in the next couple of years, which
they are forecast to do. Today’s announcement only provides minimal assistance to help first time buyers who are
desperate to achieve their property dreams.
“The silver lining in the situation is that from 1 January 2018 banks can lend over the LVR ratio to 15% of owner
occupiers, whereas, currently they can only lend at this level in 10% of cases. While this will make it easier for banks
to be more flexible around lending criteria, the question is will they ease restrictions for first time buyers in line
with the recommendations or will they keep lending at current levels?
“It’s a considered approach in terms of slowly reducing LVRs for investors, but we would call for the Reserve Bank to
take the same approach with owner occupiers by continuing to monitor the impact on the market – particularly in relation
to first time buyers.
“It is now even more important that we increase the supply of affordable housing across the country, especially for
first time buyers,” concludes Norwell.
ENDS