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,
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.