PHOTO: ASB bank confirmed on Wednesday it will consider investor loan applications for new builds where equity is less than 40 percent (LVR over 60 percent). Photo credit: Getty.
A leading bank has revoked its decision to clamp down on investor lending for new builds, saying it will now accept applications for lower equity loans.
It comes after the Reserve Bank confirmed loan-to-value ratio (LVR) requirements for banks would return to pre-COVID levels from March 1. The rules mean most property investors applying for loans will be required to have at least 30 percent equity (deposit), increasing to 40 percent from May 1. For most owner-occupiers, a minimum of 20 percent equity is required.
But borrowing to buy a new home is one of the exemptions to the LVR rules.
In a move to support first-home buyers, in November ASB introduced a minimum deposit requirement of 30 percent for property investors. Earlier this month, in response to high demand, requirements were increased to 40 percent.
On Wednesday, mortgage brokers told NZ Herald that unless investors had at least 40 percent equity, ASB was declining home loan applications for new builds.
But late on Wednesday afternoon, the bank confirmed it had revoked that decision, explaining it was trying to strike a balance between managing demand and encouraging housing supply.
“We acknowledge that in trying to do the right thing for Kiwis, and for first home buyers in particular, we may not have got the balance quite right,” ASB executive general manager retail banking Craig Sims said.
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