PHOTO: Derryn Mayne – Century 21 New Zealand owner
“Open homes are buzzing with first home buyers this long weekend, which is great to see. However, if the Reserve Bank brings back LVRs, first home buyers will sadly be hit the hardest, particularly those whose parents can’t help with a deposit,” says Derryn Mayne, Owner of Century 21 New Zealand.
Her comments follow the Reserve Bank warning it’s looking at the prospect of re-introducing loan-to-value ratio (LVR) limits on mortgage lending.
“Not enabling as many first home buyers into the market would be such a cruel blow given record-low interest rates while rents remain high. The problem is not first home buyers as they’re struggling to snap up anything at the moment, yet they could soon be collateral damage,” says Ms Mayne.
LVRs were introduced back in 2013 to cool the property market by slowing down liberal lending. Then in April this year, the Reserve Bank removed all LVR restrictions for 12 months. At the time Century 21 celebrated the move, noting it would enable more young Kiwis to buy their first homes with lower deposits now required.
“It’s not as though first home buyers are getting easy money. Not at all! Deposits still need to be paid, and banks are looking closer than ever when assessing lenders’ ability to service loans. First home buyers then have to compete with the likes of hungry ex-pats and investors, and more often than not, they miss out on their dream property. The prospect of shutting many first home buyers out completely would send a terrible signal,” she says.
“When 20% deposits were required from most owner-occupiers, many had to stump up with a six-figure sum before the bank could even consider them. LVRs created two tiers of young people – those whose families could financially help them into a house and those who couldn’t. I’d hate to see that again.”
The head of Century 21 says fair enough for the Reserve Bank to intervene if the retail banks were lending irresponsibly, but her company had not seen any evidence of that.
“We often hear the ‘haves’ and ‘have nots’ will be determined by those who come out of this Covid economy with property. We as a country need to encourage young people into home ownership, rather than pulling up the ladder behind us. Afterall, this may well be the best chance young Kiwis have to buy a house in their lifetime,” says Derryn Mayne.
ENDS
Derryn Mayne – Century 21 New Zealand owner – (021) 399-431
