ANZ cracks down on investors as politicians call to rein in Reserve Bank

by Roxanne Libatique17 Nov 2020

ANZ has joined ASB in reintroducing loan-to-value ratio (LVR) restrictions on property investors as the housing market continues to boom, noting the Reserve Bank of New Zealand (RBNZ)’s plans to reintroduce LVR restrictions next year.

Like ASB last week, ANZ has announced that it will reimpose LVR restrictions without waiting for the RBNZ’s plan in 2021, which means the minimum deposit required from property investors will increase from 20% to 30%. Pre-approvals are unaffected.

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“Today we’ve made the decision to increase the deposit required by property investors to 30%, up from the current 20% for new home lending applications from December 07,” said ANZ managing director of personal business Ben Kelleher, as reported by RNZ. “COVID-19 has made the housing market and lending decisions more complex, and we believe that any step we can take to increase balance and sustainability in the market is the right thing to do.”

ANZ’s decision comes as opposition parties call on the government to rein in the RBNZ’s “unconventional” monetary policy in order to cool the country’s red-hot housing market.

Last week, National Party shadow treasurer Andrew Bayly criticised the RBNZ’s Funding for Lending programme (FLP), which aims to provide retail banks with funding to allow them to lower their interest rates for consumers, saying that the scheme will only “add even more pressure to an already stretched housing market.”

And according to a stuff.co.nz report, Bayly has urged finance minister Grant Robertson to ask the central bank to put conditions on the $28 billion of funding it plans to give to banks under the programme.

“If the Government takes the housing situation seriously, it will send a letter of expectation to [RBNZ governor] Adrian Orr immediately, before the new scheme is implemented in December,” Bayly told stuff.co.nz.

Bayly said the government should instead look to fix what he called the “fundamental problem of the housing market” – a lack of housing supply.

The shadow treasurer also told stuff.co.nz that banks should “be more cautious about reimposing LVRs.”

“My issue with LVRs is that they can be a pretty blunt tool,” Bayly told stuff.co.nz. “They can be pretty detrimental to first-home buyers.”

Meanwhile, the Bank of New Zealand (BNZ) said it will not reimpose LVR restrictions as it is still monitoring the situation.

“As with all our price and credit settings, these remain under regular review, but we have no changes to announce at the moment,” a BNZ spokesperson told RNZ.

Kiwibank said it would continue to lend responsibly and act “in the spirit of the Reserve Bank’s decision.” Meanwhile, Westpac confirmed that it did not lift its LVR restrictions when the changes were first announced.

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