Advisers are calling for relaxed loan-to-value ratio (LVR) limits for investors as banks continue to lack flexibility despite the removal of LVR restrictions.
The Reserve Bank of New Zealand (RBNZ) last month axed LVR restrictions in response to COVID-19. However, lenders have not yet relaxed their LVR limits for investors – with the big four banks refusing to accept investor loans above 70%.
Kiwibank is the only lender that regularly offers above 70% LVR to borrowers, and advisers hope that other lenders would follow Kiwibank's footsteps as they expect market activity to drop in the coming months.
“[Kiwibank] is the only bank taking these deals and is doing a lot of them. But unfortunately, it does not have relationships with a lot of advisers,” an adviser told TMM Online.
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A Westpac spokesman confirmed that the bank had not changed its lending policies for property investors.
“We continue to approve applications on a case-by-case basis, including some above 70% LVR. We regularly review and update our lending policies to help us better serve our customers,” the spokesman told TMM Online.
However, some advisers still believe that banks would reassess their approach in the coming months to address the worsening economic impacts of COVID-19.
“I think we might see some banks go to 80% for investors shortly, particularly BNZ and ASB. Banks have to get their systems around the changes and usually have limited appetite as we head into a recession,” an adviser told TMM Online.
“They will have to look at things on a case by case basis, rather than LVR. For example, someone on solid income with a 20% deposit will be a stronger borrower than someone in the tourism sector who has a 30% deposit. It's only a matter of time before they say 20% is okay because they have to make money.”