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.