RBNZ confirmed it will ease the lending restrictions on home buyers from January 2018.
The Reserve Bank expects a modest easing of the LVR restrictions. From 1 January 2018, the LVR restrictions will require that:
- No more than 15 percent (currently 10 percent) of each bank’s new mortgage lending to owner occupiers can be at LVRs of more than 80 percent. This is good news for first home buyers who don’t have a 20% deposit.
- No more than 5 percent of each bank’s new mortgage lending to residential property investors can be at LVRs of more than 65 percent (currently 60 percent).
“Housing market policies announced by the Government are also expected to have a dampening effect on the housing market.” says Governor Spencer.
Taken together, the Reserve Bank sees that the LVRs restrictions that have been in place since 2013 have made the financial system stronger in NZ. Now that the housing market is softening, it makes sense to ease the LVR restrictions. The Reserve Bank did mention that the LVR tool was brought in as a temporary measure and when the conditions are right, they could be removed in the future.