PHOTO: Loan Market
The RBNZ has made the decision to further relax the rules around loan to value ratios (LVRs), which will offer our housing market a much-needed adrenaline shot.
An LVR is how much you borrow, compared to the value of the thing you’re buying. It’s expressed as a percentage. So, if you’re buying an apartment worth $500k and you have a $50k deposit, your LVR is $450,000 ÷ $500,000 or 90%. A lower LVR means less risk to the bank and that’s why, in 2013 when the housing market was peaking, the RBNZ tightened the LVR for lenders.
READ MORE VIA LOAN MARKET
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