Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


LVR announcement – speed bump but not all bad


21 August 2013

Issued by Momentus Public Relations Ltd

Mike Pero Real Estate - LVR announcement – speed bump but not all bad

I offer the following initial observations in response to yesterday’s Reserve Bank’s announcement that from 1 October banks will be subject to restrictions on high loan-to-value ratio (LVR) housing mortgage loans.

Firstly, the announcement highlights the important role of a close mortgage broker and a real estate agent relationship that can source alternative options beyond the registered banks. I can see banks will apply their own internal policies to apply the brakes.

I believe the changes are an innovative way of slowing the low equity market down with the emphasis on the banks to choose the most deserving customers, if they are limited to the number of loans they can offer above 80%.

While it is up to individual banks how and to whom they allocate the available credit within the LVR limit, I would anticipate that priority will be given to those first-home buyers who are best dressed – ie. good track record and good incomes. Beyond that where the banks have available funds they'll pick the eyes out of the over 80% market. If there are special circumstances for loans at 90% or even 95% the banks can do them. However lenders will obviously take a cautious view of those restrictions to ensure they stay within the RB's policy.

In my opinion, there will be a slight reduction in market pace but maybe not as severe as we thought in the worst case scenario of a blanket restriction against over 80% lending.

Obviously the flow on effect will slow real estate sales across all sectors because of the flow on effect - its a bit like killing one cylinder on a V8 car – it will still have some pace but won't be as fast or as aggressive as all eight cylinders.

Finance options on homes for sale will have an effect on the saleability of some homes and where options are available, at time of sale, beyond 80% it could be considered added value to first home buyers.

All in all the news is not devastating – just a small obstacle." Pero said.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Grey Power: Is Disappointed To Learn Of More Bank Closures

Many older people are being left without essential services because of cost cutting and the march of modern technology. It is now expected that most banking transactions can occur via the internet or telephone. Jan Pentecost, President of the Grey Power ... More>>


Economy: Supply Chain On Brink Of Overload Says National Road Carriers

The New Zealand supply chain is on the brink of overload and it looks like the upcoming peak imports season may push it over the edge says National Road Carriers Association (NRC) CEO David Aitken. “Worldwide supply chains are in disarray,” says Mr Aitken. ... More>>

Retail: Supermarkets Announced As Government’s Second Market Study

The Government has today launched a market study to ensure New Zealanders are paying a fair price for groceries. More>>


Statistics New Zealand: Retail Sales Recover In The September 2020 Quarter

Retail sales values recorded the largest September quarter rise since the series began in 1995, Stats NZ said today. Spending on major household items, vehicles, and groceries contributed to the strong 7.4 percent ($1.8 billion) rise in total ... More>>

Kea Aerospace: New Zealand Flies Into The Stratosphere

Development has started on a solar-powered, unmanned aircraft that can fly in the stratosphere continuously for months at a time. The zero-emission aircraft will carry a suite of imagery equipment that will be game-changing for many industries, vastly ... More>>

Stats NZ: Births And Deaths: Year Ended September 2020

Births and deaths releases provide statistics on the number of births and deaths registered in New Zealand, and selected fertility and mortality rates. Key facts For the year ended September 2020: 57,753 live births and 32,670 deaths ... More>>


Forest & Bird: Kākāpō Wins Bird Of The Year 2020

The nation has voted and Aotearoa New Zealand has a new Bird of the Year. New Zealand’s moss-colored flightless parrot has climbed to the top-spot for the second time in Forest & Bird’s annual Te Manu Rongonui o Te Tau/Bird of the Year competition. ... More>>