ANZ to increase investor property loan deposit to 30pc

A second major bank says it will increase the deposit requirements for investors to buy property from 20 per cent to 30 per cent.

ANZ, New Zealand’s largest bank, will bring in the higher deposit rate from December 7 and comes on the back of rival bank ASB announcing yesterday that it would immediately increase the requirement to 30 per cent for investors.

On Wednesday the Reserve Bank said it would consult on bringing loan to value ratio restrictions back from March 1. LVRs restrict how much banks can lend to low deposit borrowers.

It dropped the LVRs in May for a year to ensure banks could go ahead with the mortgage deferral scheme put in place because of the Covid-19 pandemic and to ensure credit kept flowing into the market.

But an unexpected booming property market has seen calls by economists to bring the restrictions back sooner.

Ben Kelleher, ANZ NZ managing director personal, said the bank had been closely monitoring the impact of low interest rates and reduced LVR requirements on the residential property market.

“It’s in everyone’s interests for residential property prices to be sustainable long term, and for home ownership to be accessible to as many Kiwis as possible.”

Kelleher said in October, which was record home lending month for ANZ, 31 per cent of its home loan commitments were to property investors while 19 per cent was to first home buyers.

“Today we’ve made the decision to increase the deposit required by property investors to 30 per cent, up from the current 20 per cent for new home lending applications from 7 December.

“As a responsible lender it’s important for us to help customers make good borrowing decisions, and that customers have a level of borrowing they can comfortably pay back. Covid-19 has made the housing market and lending decisions more complex, and we believe that any steps we can take to increase balance and sustainability in the market is the right thing to do.”

Other banks have yet to bring in a hard line increase.

A Kiwibank spokeswoman said it would be “acting in the spirit of the Reserve Bank’s direction while ensuring customers can appropriately transition to the new environment.”

“Kiwibank continues to take its responsible lending obligations seriously to ensure all lending decisions are in the best interest of the customer and appropriate for their individual circumstances.”

A BNZ spokesman said its price and credit settings remained under regular review but it had no changes to announce at the moment.

“Taking away LVRs has provided welcome additional flexibility and low interest rates has helped provide confidence through increased energy in the market.

“BNZ always takes a prudent approach to lending to ensure people are in a position to service their loans, even without RBNZ LVR restrictions. We think that customers should have some equity in their homes to ensure they are well-positioned given the continued economic uncertainty from Covid-19.”

Gina Dellabarca, Westpac NZ general manager of consumer banking and wealth said it never changed its lending settings and they remained in line with previous LVR rules.

“We have remained open for business across all segments and have grown our support for housing, agri and business customers over the past year.”

Under the previous LVR rules banks were only able to do 5 per cent of new lending to investors with a deposit of under 30 per cent.

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