The Reserve Bank’s easing of the LVR restrictions came into effect from 1st January 2019. We have been inundated with calls and emails from first home buyers and property investors wanting guidance with their property intentions since the announcement late last year. It has been forecast for a while but it is fantastic that it has now actually happened. We think the effect will be considerable and will encourage strong interest from both first home buyers and property investors alike.
To summarise the changes to the LVR restrictions…
From 1st January 2019:
Up to 20% (increased from 15%) of new mortgage loans to owner occupiers can have deposits of less than 20%.
Up to 5% of new mortgage loans to property investors can have deposits of less than 30% (lowered from 35%).
What these changes mean is the Banks will now lend to more people wishing to borrow in excess of 80% of their owner occupied property’s value, and you may be able to borrow up to 70% of the value of an investment property.
When the LVR restrictions first eased from 40% to 35%, we saw investors starting to return to the market. This latest news will also bring those, who up until now may not have had enough equity in their portfolio to meet the LVR rules, back into the game. With the lack of housing in New Zealand, becoming a landlord remains an attractive option. In Christchurch we are seeing an uplift in rental returns.
This, added to the low interest rates we have been seeing recently, makes it a great time to speak to a mortgage adviser to discuss the pros and cons of breaking your existing loan, if on a fixed rate already, and refixing at a lower rate if a cost saving is evident. The interest rate war has brought with it the lowest rates seen in almost 70 years, and they’re likely to stay low for a time yet!
It’s good practice to review your mortgage frequently to ensure it’s suited to your particular circumstances. A lot can change between buying a home and two, three or even five years down the track. Give the team at Tony Mounce Mortgages & Insurance a call if you want to find out what these new rules mean for you and to see how we can help you achieve your property goals. 0800 MOUNCE