New Reserve Bank lending requirements are being implemented at the end of the month for the Auckland investment property market. A standalone investment property in Auckland will now be limited to 70% lending. Those who want a greater level of lending can still use existing equity in another property such as the home that they are living in to obtain the other 30% if so desired.
The BNZ has introduced a 2 year fixed home loan rate of 4.39%.
Making it 3 in a row the Reserve Bank cut the Official Cash Rate (OCR) today by 25 basis points to 2.75 percent.
Auckland houses prices got their regular mention with “”House prices in Auckland continue to increase rapidly and are becoming more unsustainable””.
Despite that statement a strong bias towards further cuts was provided. “At this stage, some further easing in the OCR seems likely. This will depend on the emerging flow of economic data.””
Fixed interest rates continue to tumble with ASB out earlier in the week with 6 months fixed thru to 4 years fixed all under 5%.
A 2 year fixed interest rate of 4.69% is out from Westpac today in line with the BNZ’s offering. (for the under 80%’ers)
The Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis points to 3.0 percent.
Variable interest rates should reduce over the next few days.
A further cut is on the horizon judging from todays statement.
“”A reduction in the OCR is warranted by the softening in the economic outlook and low inflation. At this point, some further easing seems likely.””
The OCR got a 0.25% trim this morning to 3.25% in an attempt to give inflation, which is near enough at zero, a nudge along and to give the NZ$ a helping hand downwards. The Reserve Bank included a bias towards further cuts going forward.
$154,000 secured a 2 bedroom in the Columbia building yesterday. Located in Grafton the fully managed student accommodation, not reknowned for its investment return, provides for net annual rental income of $6,000. Purchased sight unseen evidently.
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.
No Change in the OCR this morning.
Boring..? Well, be glad we aren’t in Brazil. Their Central Bank lifted the Benchmark Rate by 0.50% to 13.25% yesterday.
BNZ has cut its 2 Year Fixed Rate to 5.15% (for a short time only)
ASB has lowered their 3 and 5 year “special rates” for the under 80%’ers to 5.45% and 5.65% respectively.