LVR restrictions will have little impact on prices
LVR restrictions will have little impact on rising prices
Joint Press Release: Harcourts and Mortgage Express
20 August 2013
Harcourts New Zealand says first home buyers will be penalised by the Government’s decision to introduce loan-to-value ratio restrictions.
CEO Hayden Duncan says the restrictions, which will come in on 1 October 2013 and are stricter than expected, will have no impact on the real housing issue of low supply.
Instead it will penalise first home buyers who are already struggling to enter the market and have little effect on rising house prices. Those who can afford to pay more will continue to do so.
“It is not high loan-to-value ratios, or first home buyers, who are causing property prices to rise. It is simply the fact New Zealand, and particularly Auckland and Christchurch, do not have enough housing stock to meet the demands of our population and investors,” Mr Duncan says.
The restrictions will reduce the amount of high LVR loans banks can offer, making it more difficult to get a mortgage with a deposit of less than 20%.
Mortgage Express is the largest non-franchise mortgage advisory service in New Zealand and is Harcourts’ finance arm. CEO Marcus Williams says already there has been strong interest from second tier lenders to assist clients to meet the new requirements through caveat lending.
Other options for clients unable to meet the restrictions include personal loans and family member guarantees, which mainstream banks have already indicated they will accept.
“Although this will make it more difficult for first home buyers, there are ways to meet the new LVR restrictions,” Mr Williams says.
Hayden Duncan says rising house prices will be tempered when low stock levels are fundamentally addressed.
“This answer is reducing development fees and building costs and speeding up the consents process. The government should be looking to the source of the problem, not putting restrictions on the people who can least afford them.”