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\nRBNZ is proposing to let banks have up to 25 percent of new lending to owner-occupiers with less than a 20 percent deposit.
\nPhoto: RNZ \/ Dom Thomas\n<\/p>\n
Reserve Bank proposes easing loan-to-value ratios
\n Suggests limit for owner-occupiers rise to 25 percent, and for investors to 10 percent
\n LVR easing possible because of debt-to-income ratios, which stay unchanged
\n LVR easing should make banks flexible, improve credit access<\/p>\n
The chances of first-home buyers getting a mortgage may improve with a proposal to allow banks to lend more to low-deposit borrowers.<\/p>\n
The Reserve Bank (RBNZ) is consulting on easing loan-to-value ratios (LVR), which have been one of its policies to keep house prices and risky borrowing in check.<\/p>\n
Acting assistant governor financial stability Angus McGregor said the introduction of debt-to-income ratios (DTI)<\/a> last year has improved the protections against risky lending, while the market was also subdued.<\/p>\n “House prices are within our range of sustainable estimates. Growth in mortgage lending remains moderate and the share of high-risk lending is low.<\/p>\n “Easier LVR settings will give banks more flexibility to lend, improving market efficiency and access to credit, particularly for first-home buyers.”<\/p>\n More lending for low-deposit borrowers<\/p>\n RBNZ is proposing to let banks have up to 25 percent of new lending to owner-occupiers with less than a 20 percent deposit.<\/p>\n For investors, the lending limit would be increased to 10 percent for those with less than a 30 percent deposit.<\/p>\n The current limits are 20 percent for owner-occupiers and 5 percent for investors.<\/p>\n RBNZ said it would consult with banks and proposed the new limits should come into force in December.<\/p>\n Finance Minister Nicola Willis said easing the restrictions should help first-time buyers.<\/p>\n “Relaxing the restrictions on the amounts banks can lend will make it easier for Kiwis to get a foot on the property ladder.”<\/p>\n \nFinance Minister Nicola Willis and the new Reserve Bank governor Dr Anna Breman. Guardrails against hot housing markets<\/p>\n The LVRs were brought in in late-2013 to counter the surging housing market, which was being fuelled by low-deposit lending.<\/p>\n They were suspended during the start of the pandemic in 2020, but reinstated a year later as the housing market was reignited by cheap money<\/a>.<\/p>\n As an added protection against the hot housing market and the possible fallout in the event of a major crash, RBNZ brought in debt-to-income ratios in July 2024<\/a>, limiting most owner occupiers to loans of no more than six times their gross income, and investors to no loans of no more than seven times their income.<\/p>\n McGregor said the newly formed Financial Policy Committee<\/a> would administer and set the LVR and DTI policies.<\/p>\n<\/p>\n
\nPhoto: RNZ \/ Mark Papalii\n<\/p>\n