The Reserve Bank of New Zealand has been accused of stifling first home buyers’ chances of getting into the property market by reducing the owner-occupier LVR to 80 per cent.
Kiwi investors must now have a deposit of 20 per cent of their desired owner-occupier property value to qualify for a loan, a change the Property Institute of New Zealand stresses will have unfair ramifications for young first-time buyers.
“The main barrier to first home ownership isn’t housing affordability or the cost of servicing a mortgage it’s the LVR restrictions,” argues the Property Institute’s chief executive Ashley Church.
“That means that a generation of kiwis can say goodbye to a first home because of an artificial barrier, created by the Reserve Bank, to solve a problem which almost certainly doesn’t exist.”
The median property price in Auckland is now above $1m.
The LVR changes have made it even harder for investors to get a loan, with a minimum deposit of 40 per cent required for new investor loans. It saw investor lending drop from $2.337 in July to $2.012 bn in August, according to the central bank’s mortgage statistics.
The clampdown follows similar action in Australia last year, which saw LVRs capped at 80 per cent for most new loans. The majority of lenders listed on RateCity.com.au will not lend to borrowers with a deposit below 20 per cent unless they have lenders’ mortgage insurance.