More banks move on Reserve Bank investor restrictions


All five of the country's leading retail banks have taken on the Reserve Bank's investor restrictions early.

The Reserve Bank (RBNZ) announced changes to its loan-to-value policy on Tuesday which included only lending to investors who had a deposit of 40 percent or more. Those who didn’t would only qualify for a five percent loan.

The regulations extend and expand the demand for a 30 percent deposit on investment properties in Auckland introduced last year.

Westpac was the first to move, announcing on Wednesday that it would not take on any new investor loans with deposits under the 40 percent mark.

ANZ, ASB and BNZ banks made changes on Thursday.

ASB said existing approvals and pre-approvals above the new 60 percent loan-to-value ratio would be honoured until their documented expiry date.

ANZ, the country's biggest lender, said its maximum loan-to-value ratio of 60 percent for property investors will apply across New Zealand. It was previously 70 percent for Auckland. It's also extended the 85 percent ratio in Auckland owner-occupied homes across New Zealand.

The bank said it intends honouring all existing pre-approvals but any renewals will be subject to the new policy.

It said in a statement the changes were "a sensible and responsible response to market conditions".

Last to the party was state-owned Kiwibank which said on Thursday afternoon, it had "communicated the new restrictions to staff and will not accept applications that are not compliant with the proposed new speed limits".

Kiwibank said it will honour existing commitments made to customers and continue to "prioritise first home buyers and owner-occupiers as we have in the past".

The central bank said earlier this week it intends to have the new lending restrictions in force by September 1 and asked lenders to comply with the spirit of the new regulations immediately.

Labour’s housing spokesperson Phil Twyford says the banks have acted responsibly by implementing the measures earlier than required.

“The moves by ANZ, Westpac and ASB have highlighted the risks to the housing market posed by out of control property speculation. Hopefully the other banks will follow suit.”

Mr Twyford says it’s a shame the Government isn’t as motivated to act on the housing crisis as the banks are.

“Banks make billions of dollars in profit from mortgage lending, yet even they are saying the market is out of control and at risk of a bust.”

“It is a bizarre situation where the banks are voluntarily moving to restrict property speculation, just as they moved to shut down lending to non-resident foreign buyers – while the Government looks for all the world like a possum in the headlights, and seems only capable of blaming the Auckland Council, and counselling first home buyers to be patient.”

Phil Twyford is joining what he calls “a chorus of establishment voices” raising the alarm about the housing crisis and saying that the Government’s policy response is inadequate.

“Meanwhile the Government is officially in denial, but daily flounders around announcing random policy seemingly designed to make it look as if they are doing something.”