The Reserve Bank says that from 1 July, banks will only be able to lend about 20 percent of their new lending to owner-occupier borrowers with a debt-to-income ratio of more than six. That means, if your household earns a combined $100,000, your loan will be limited to $600,000.
Banks will only be able to lend 20 percent of lending to investors with a DTI of more than seven.
The rules won’t apply to Kainga Ora loans, new builds or refinances.
At the same time, the bank will loosen the loan-to-value ratio (LVR) restrictions so that banks can lend 20 percent of their lending to owner-occupiers with deposits of less than 20 percent, from 15 percent at the moment, and 5 percent of lending can be done to property investors with equity or deposits of less than 30 percent, compared to 35 percent at present,
TL;DR the reserve bank is going to loosen restrictions on equity and instead have restrictions on income, with an expected impact that investors can’t just buy more houses using equity when the house values go up.
This is good!
They’re finally regulating mortgages in terms of affordability.
Hopefully this will cool the investor market a little.
Stand by for the government to pass some bullshit under urgency to heat it back up again.
Yeah that’s what interests me, given the funding they’ve raked in from property related interests over the last couple of years they are quite beholden to that lobby.
Yes it seems like a good move on behalf of the RBNZ. Interest rates are likely to head down from here on out, and that means people can borrow more on the same income. Adding a cap before it starts to happen is a good plan.