Category Archives: Market Updates

Mortgage deferral scheme extended

The Reserve Bank today announced an extension of the regulatory guidance for the mortgage deferrals program to help customers in need.

The regulatory guidance means banks can continue to offer temporary mortgage deferrals to their customers. (Previously erroneously called “Holidays”)

In a nutshell if impacted by the Rona you may be able to extend your mortgage repayment hold out to 31 March 2021 .

Your Lender will be asking a swathe of questions as to whether or not this is a good idea and your reasoning behind such a request.

As always please get in touch if you require assistance.

Temporary Mortgage Relief

The main banks are out with temporary mortgage relief packages in line with the 6 month “holiday” announced by the Government last week. This program is a JV between the RBNZ, retail Banks and the Government.

Options include taking interest only for 12 months ie: paying only the interest cost with no payments to reduce the amount of the loan.

Or a loan repayment deferral which involves no repayments at all for 6 months.

Make no mistake, this is no “Mortgage Holiday”.

Your loan amount will increase while your repayments are paused.

And the Lender will still charge interest on what you owe on your loan. This interest is added to your loan amount and they charge interest on that amount as normal.

GLTA 🙂

Bank Assistance

Facilities are being put in place to temporarily assist customers facing cash flow issues.

Options include..

Access:

Waiver of home loan application, top-up, and re-documentation fees (Early Repayment Adjustment fees still apply).

Relief:

  • Interest only repayments on home loans for up to 3 months.
  • Home loan holiday for up to 3 months (interest will still be added to the loan).
  • Ability to extend home loan term for up to 3 months.

Property Market Gets A Yank On The Handbrake

The government has introduced a capital gains tax on residential property holdings for buy and sells within 2 years. Exemptions mean owner occupied housing is unlikely to be affected but the eye opener is that all non resident tax payers will now have to register with IRD and open an NZ bank account. Non resident purchasing of property here just became distinctly less attractive i’d imagine.

The odds of a OCR reduction next month have shortened considerably as result of the 2 big recent property announcements.

ANZ Bank has cut fixed interest rates today. 1,2 and 3 years fixed now @ 5.59%.

Reserve Bank announces proposed changes to the loan-to-value ratio (LVR) policy.

The policy changes, proposed to take effect from 1 October, will:

  • Require residential property investors in the Auckland Council area using bank loans to have a deposit of at least 30 percent.
  • Increase the existing speed limit for high LVR borrowing outside of Auckland from 10 to 15 percent, to reflect the more subdued housing market conditions outside of Auckland.
  • Retain the existing 10 percent speed limit for loans to owner-occupiers in Auckland at LVRs of greater than 80 percent.

The changes also come with an expectation that Banks are to hold more capital against loans in the category of residential property investors.

At street level this may mean fee’s and / or an interest rate  margin being applied to property investor lending.

We shall wait and see. A summary of a consultation process will be released at the end of the month.

Reserve Bank looks for a definition of “Property Investor”

The Reserve Bank, in looking to have some control over the Auckland property market without using interest rates, is consulting with market participants on a definition of “Property Investor”.

Its providing 3 options for comment on.

  • if the mortgaged property is not owner-occupied; or
  • if servicing of the mortgage loan is primarily reliant on rental income; or
  • if servicing of the mortgage loan is at all reliant on rental income.

By requiring the Banks to section off all loans in this yet to be defined category, it will be able to target specific action, rather than raising or lowering the cash rate which affects all borrowers to some extent.

Bottom line: The ground work is being laid for higher interest rates and / or an Application Fee to apply to property investment loans.