When the Reserve Bank announced that the pending changes to the LVR rules for investors the banks all hastily started re-implementing the LVR criteria restricting investors to a minimum 30% deposit.
On the 11th November the Reserve Bank stated that in December, they will consult about re-instating loan-to-value ratio (LVR) restrictions on high-risk lending with effect from 1 March 2021.
As a mortgage adviser that specialises in new builds I have spoken about the exemptions for new builds, and the fact that the banks appear to have been missed the previous exemptions when reintroducing the LVR rules for new builds.
When the banks were announcing the LVR criteria for investors I was specifically asking each of them about treatment of new builds and until today all have said that there was no differentiation for new builds which seemed more of an oversight as we know that there is a housing shortage.
Well today (2nd December 2020) BNZ have released their exemptions and they include:
(a) if an investor is purchasing a Fixed Price Contract new build from the builder/developer up to 85% LVR may be permitted,
(b) if an investor is purchasing a turn-key or off-plan property from the builder/developer up to 90% LVR may be permitted and
(c) dollar for dollar refinances may also meet the exemption criteria. Hopefully we will also see the other banks start to roll out exemption criteria too.
Of course now that BNZ have clarified their criteria we would expect other banks to follow.
It Makes Sense To Encourage New Builds
We know that there is a housing shortage and that’s seeing house prices increase at a rapid rate.
It therefore makes sense to encourage the building of new houses both as homes for owner occupiers and also as homes for tenants.
It’s therefore great to see common sense prevail and the reintroducing the exemption to the LVR rules for new builds.