The Minister of Finance has announced he expects the Reserve Bank to have regard to house price sustainability when making its financial stability policy decisions.
Expect Interest Only Lending to come under further scrutiny.
And regulated debt-to-income ratios to come closer to reality.
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.
Barfoot and Thompsons December sales figures are out confirming anecdotal evidence of a slow down. December 2015 sales were 796 down from December 2014 sales of 1050. A 24% fall. Some of the froth is coming out of the Auckland market.
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%.
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.
PH: 0800 2 FINANCE. Auckland Based Mortgage and Insurance Assistance Since 2002