BUILD AN INVESTMENT PROPERTY
February 15, 2021 at 8:43 PM
What are RBNZ LVR restrictions?
The Reserve Bank of NZ (RBNZ) introduced LVR Restrictions in October 2013 due to rapid house price growth. Once it was implemented it had an immediate dampening effect to housing market activity.
The LVR restrictions targeted property investors and home owners, where you now needed a larger deposit for a home loan to purchase an existing residential property.
When it was introduced, property investors required at least a 30% deposit and home owners required 20% to apply for a home loan with a bank.
How did COVID-19 impact these LVR restrictions?
It was agreed that in April 2020, the LVR restrictions would be temporarily removed to promote cashflow and confidence.
Since then, the housing market accelerated and set new records against the national median price. In addition, new mortgage lending continued at a strong pace.
What's happening to the LVR restrictions now?
The RBNZ have decided to re-instate the LVR restrictions. Because of concerns with the risk of a sharp correction in the housing market, the RBNZ will be imposing tougher LVR restrictions to property investors, in particular.
Property investors now require a 40% deposit or more to purchase an existing residential investment property.
So what's this 15% deposit about?
Running alongside the LVR restrictions, the RBNZ also introduced exemptions. One of these exemptions allowed banks to accept low deposit home loans for construction purposes - in particular for investors.
We fully support these exemptions, particularly for investors. The way we see it, with more properties adding to the existing property stocks, tenants and potentially new home buyers have more to choose from. At the moment, property stocks are so low with demand being very high which is fuelling the housing market.
One bank in particular is offering 15% deposit for Investor Construction Home Loans for residential properties.
How do I know if I qualify?
If your time is precious, take 5 minutes to complete our short form by clicking here. We will call you with our findings and what next to do.
Complete our full application and upload your documents which will allow us to conduct a better assessment - click here