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.