The Reserve Bank of New Zealand (RBNZ) today confirmed that new rules tighten restrictions on bank lending to residential property buyers throughout New Zealand.
A 40% deposit on a mortgage loan will be required for residential property investors, effective 1 October and owner-occupiers will generally need a 20% deposit.
Banks will still be able to make a small proportion of their lending to both investor and owner-occupiers with smaller deposits.
Confirmation of the new rules is in the Reserve Bank’s response to submissions
to its public consultation about changes to Loan to Value Ratio (LVR) rules that was issued on 19 July.
The Reserve Bank is modifying its proposals in response to public consultation, and also through meetings and workshops with banks that are subject to the rules.
Banks have already implemented the new limits even though the new rules take effect on 1 October 2016.
The RBNZ said in its release that existing exemptions to LVR restrictions will continue to apply under the new rules and have been extended to include borrowing for a newly-built home, or to do work needed for a residence to comply with new building codes and rental-property standards.