LVR restrictions may become permanent

By WMB Admin In Uncategorized No comments

New Reserve Bank governor Adrian Orr has indicated that the current LVR restrictions enforced on the banks as a lending ‘speed limit’ may be a permanent tool going forward. The recent uptake in first home buyers being a large part of the market (especially in Wellington) has lead to the Reserve Bank potentially looking at keeping the restrictions as a long term fixture.

At the moment banks can allocate 15% of their lending to high LVR first home borrowers (with some minor exceptions) and investors need a 35% deposit on existing house purchases.

While the system seems to be working at the moment it will be interesting to see if further ‘tweaks’ are made in future.

Those building a house are still exempt from the LVR restrictions, though the cost of land and building has made this a difficult proposition for first home buyers.

Investors can also still get bank funding on new builds to 80% LVR.