Latest Reserve Bank Announcement!
The RBNZ has this morning put a 40% restriction on the banks in regards to investment lending.
Note that while this effectively is not in place until September this year, I am expecting the banks to action it immediately in most cases, which basically means that if you are not preapproved at least, it is extremely unlikely that you will get this sort of lending above a 60% Loan to Value Ratio (LVR).
- New builds are exempt.
- If you have a preapproval and are wanting to get into the investment market and do not have the ability to come up with a 40% deposit then you need to try and find something suitable quickly as you will not be able to get your preapproval rolled over.
- If you have 2 properties with the same lender and are looking to sell one, note that there is a strong chance that the bank will require the LVR against the remaining property to be kept at 60% LVR, meaning that they may take more of the sales proceeds than what you are expecting.
- If you are selling get your Solicitor to request what discharge amount will be required. As always this is a valid reason why we recommend split banking. If you are not sure what this is exactly contact Matt Willoughby Now or hold out for this Month’s regular post.
Non Bank Lenders
I have access to smaller Lenders who will become much more useful off the back of this announcement as they don’t have to abide by these same restrictions and can continue to do 80% Loans e.g 20% Deposit funding across the country including Auckland. Yes you heard that right!
Note that they are actually very reasonably priced. Here is an example of some rates as of today at an 80% LVR Loan Approved:
Floating – 5.34%
Fixed 1 year – 4.95%
Fixed 2 year – 4.99%
Fixed 3 year – 5.05%
Fixed 4 year – 5.16%
Fixed 5 year – 5.27%
On the flipside I’ve seen a number of investors manage to get some really good deals straight after the implementation of previous restrictions, as these tend to make most people procrastinate for a period of time, so if you are looking to add to your portfolio keep an eye out.