Property experts in Rotorua are welcoming moves by the Reserve Bank to cut loan value restrictions on mortgages. Photo / File
Property experts in Rotorua are welcoming moves by the Reserve Bank to cut loan value restrictions on mortgages. Photo / File
Rotorua property experts are hopeful the Reserve Bank will scrap loan-to-value ratio restrictions to help stimulate the housing market.
Deputy Governor and general manager of financial stability Geoff Bascand announced the proposal earlier this week in response to the economic downturn caused by Covid-19.
Bascand said it was one ofthe macro-prudential tools the bank had to respond to cyclical pressures and if it was given the green light LVRs could be gone for at least 12 months.
Professionals McDowell Real Estate owner Steve Lovegrove. Photo / File
Professionals McDowell Real Estate owner Steve Lovegrove said any barriers that could be removed to enable people to get on to the property ladder would create more opportunities for first-home buyers.
If the banks gave people a bit of leeway and discretion, those who had put buying a house into the ''too hard basket'' could start thinking about it, he said.
''I have spoken to people even in the last few days who are now reconsidering it.
''But I do think banks will proceed with caution, it definitely won't be a free for all.
''Although I can't see it being a rampage of people borrowing money with very little deposits and going into a buying frenzy.''
Lovegrove also felt the market may hold its own because there were not enough houses for people in Rotorua and very little building activity.
Rotorua First National principal Anne Crossley. Photo / File
Rotorua First National principal Anne Crossley said it would be trial and error to see what did and did not happen.
''But it has got to be a good thing to make people feel comfortable and the banks feel more comfortable about lending. I think it will one of many things they can tweak or adjust going forward to help the economy recover."
Bayleys and Eves Realty Waikato/Bay of Plenty/Taranaki chief executive Heath Young. Photo / File
Bayleys and Eves Realty Waikato/Bay of Plenty/Taranaki chief executive Heath Young said the shift in direction ''can only be interpreted as a positive move''.
First-home buyers and those looking to upgrade from one property to their next will benefit the most, he said.
''Banks will still apply their typical credit criteria, however a move from 20 per cent to 10 per cent required for a home deposit is significant and will definitely assist in stimulating the market.''
Young said the Rotorua market was tracking very well in terms of volume and pricing heading into lockdown but it was too early to be making calls on pricing.
''The property market has effectively been put into a holding pattern for a month and the coming months will provide a clearer read on what's happening once the extent of the economic impact is known.''
OneRoof editor Owen Vaughan said he supported the move to scrap LVR restrictions which would be ''bold and necessary'' to provide certainty to a wide range of buyers and sellers.
''It will mean those people who are financially secure and are in a position to buy can do so with added certainty. And that's going to provide a big boost to the market.''
But it would not create a free for all as ''banks aren't going to be suddenly handing out mortgages with a 5 per cent deposit''.
''They're still going to be prudent ... and assess candidates for mortgages, on their ability to repay that loan.''
Kiwibank external communications manager Kara Tait said Kiwibank was supportive of the proposed change from the Reserve Bank which would provide more flexibility when assisting customers impacted by Covid-19 who have taken up home loan repayment deferrals.
But it was important people were also aware of potential price volatility in this market and how that can impact their equity.
''Our focus is ensuring customers can afford their proposed lending. This remains key under any environment.''
ANZ external communications corporate affairs manager Stefan Herrick said it also welcomed initiatives by the Reserve Bank to strengthen the financial system and help New Zealanders impacted by Covid-19.
''We support the consultation process over temporarily removing LVR restrictions on home loans and look forward to discussing the matter with the Reserve Bank over the next few days.''
A Westpac NZ spokesman said it was considering what the proposal meant for the bank ''and our customers, and will look at providing feedback to the Reserve Bank as part of the consultation''.
Its Family Springboard product allowed first-home buyers' families to contribute by using their own home as security on the loan.
• The NZRB was currently consulting on its LVR restriction proposal. Feedback opened on April 21 and would close on April 28.
