ASB has today implemented a $400 “home loan processing fee” onto investment lending applications.
Today the RBNZ released a “consultation paper” about further lending restrictions being applied in attempt to slow down the price increases of the property market.
The majority of Property Investors will soon need a 40% deposit which is to be applied nationwide. The Banks will start implementing this before the proposed start date of 1st September as the finger was wagged with “We expect banks to observe the spirit of the new restrictions in the lead-up to the new policy taking effect.”
In a sign that the ANZ Bank views the property market as being “toppy” they have reduced the maximum Auckland property lending ratio to 85% (including the LEP fee’s).
Property lending outside of Auckland is also getting trimmed to 90% .
Its a clear sign the Bank is looking to reduce its exposure.
Westpac has raised their LVR limit on Apartment Lending to 85% in the hope of attracting canny First Home Buyers.
As always there’s some restrictions.
• A minimum apartment value of $355,000
• Minimum 50sqm (excluding decks, balconies, storage areas, car parks and common areas)
- Owner occupied apartments only
Following on from our post describing ASB’s recent easing of home loan lending criteria, the ANZ has recently had an easing of their own in the area of over 80% lending.
The ANZ, assisted by their ownership of National Bank, are the largest player in the market, and the changes made make it easier to get a low deposit home loan lending proposal approved. As an example, a loan can now be measured over a 30 year term, up from a previously limiting 20 – 25 year loan term. The positive net affect for those needing a low deposit home loan is that the same amount of income will now support a larger loan amount. Once again we see restrictions, that had been put in place as a result of the GFC and its general malaise, being lifted.
At auction today this “do up” villa on 405 sqm @ 37 Third Avenue in Kingsland sold for $692,000.!!
In the past couple of weeks we have noticed senior bank staff in the newspapers indicating a willingness to lend. Further evidence of this is seen today with ASB easing its home loan lending criteria. Namely they have reduced the internal interest rate used to calculate a clients home loan servicing ability, or in other words, affordability. This has a direct effect on the calculation that the bank is willing to lend you based on your income level.
Effectively your income will now support a larger loan amount today with the ASB than it did yesterday. The bank had raised this interest rate back in May 2009 as a result of the general nervousness of that time, and its reduction today, is further evidence of home loan lending criteria improving.
Anz National Bank offered up some improved credit criteria a couple of days before Christmas.
Having previously been very reluctant to lend over 80%, even for existing customers, they provided some updated policy on lending over 80%. This represented an easing in their home loan lending criteria. Officially they are now back in the market to lend up to 90% of a properties value. At the 85% to 90% level your still going to need to fit within some reasonably firm parameters. For example; you’ll have to be an owner occupier, the main income earner in the household will need to be earning at least $50,000 p.a., you’ll need to be able to show evidence of regular savings,(not a widespread Kiwi trait) and the loan term will be a maximum of 20 years.
These types of adjustments will make it easier for more people to qualify to obtain a mortgage.
We hope youve all managed some time away at the beach over Christmas and New Years.
Due to current market conditions there have been a number of reductions in levels that lenders are prepared to lend to. It has mainly been with the “Low Doc” or “No Financials” variety of loans.
In addition “servicing criteria”, an applicants calculated ability to cover the monthly cost of a loan, has been tightening too.
Some, but not all, are as follows…
ASB low doc was 80% this changed last Friday to 60%, and we have just heard that as of today its now zero %…IE: no low docs!
UPDATE 3.30pm ASB is restricting all housing lending for new customers to 80%
Westpac low doc was 85% now 65%
In addition some lenders are showing reluctance to lend on apartments, unsurprisingly given the recent waves of negative publicity.
Sovereign, a lender we have regularly used for apartments in the past, won’t currently lend anything on an apartment in a building with more than 3 floors.
Kiwibank is also not doing low doc loans on apartments.
Still a round of tax cuts went into your paycheck on the 1st of October, so it isn’t all bad. 😆