Easing LVRs good news for first-home buyers – C21NZ

Homeowner hopefuls urged not to give up

Easing LVRs good news for first-home buyers – C21NZ

Tim Kearins (pictured above), owner of Century 21 New Zealand, said the Reserve Bank’s plan to ease LVR restrictions is “good news,” not just for first-home buyers, but also for the wider real estate sector. 

Kearins’ come following RBNZ’s proposal to loosen LVR restrictions from June 1, which will lift the limit on loans for owner-occupiers with LVR above 80%, from 10% to 15%, and will enable banks to make 5% of total new investor loans to those with LVRs above 65%, up from the current 60%.

“Restrictions on high-LVR residential mortgage lending set a ‘speed limit’ on how much new low-deposit lending banks can do,” said Christian Hawkesby, RBNZ deputy governor.

The central bank put the current LVR settings in place in November 2021 when risks were elevated, but now believes the current restrictions “may be unnecessarily reducing efficiency” and “impeding the provision of credit to some otherwise creditworthy borrowers,” Hawkesby said.

“The fact that banks will soon be able to approve up to 15% of their new lending to owner-occupiers borrowing more than 80% is good news,” Kearins said. “In short it means fewer first-home buyers will need a 20% deposit to buy a house.” 

The Century 21 leader said the change will go some way in improving access to credit, but that the hurdles were still proving too high for many despite applicants’ ability to earn and service a mortgage. 

“A 20% deposit is a big ask in this environment when everyone is dealing with a cost-of-living crisis,” Kearins said. “This move will enable a few more Kiwis to get over the line and onto the housing ladder.” 

He encouraged potential homeowners who were paying sky-high rents and seeing softening purchase prices to approach mortgage brokers as well as look into government assistance schemes on offer, including First Home Grants, First Home Loans, and First Home Partner.

“We know it has been frustrating, but a lesser deposit could now be doable,” Kearins said. “Borrowers may also be eligible for one of the government’s first-home schemes. Given all the property opportunities out there this winter, we’re saying to renters, borrowing and buying is now well worth a second look.”

To provide feedback on Reserve Bank’s proposal, email [email protected].

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