Home New loan ANZ follows BNZ, Kiwibank to ‘suspend’ low deposit home loans

ANZ follows BNZ, Kiwibank to ‘suspend’ low deposit home loans

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ANZ is the latest bank to tell would-be buyers with less than 20% deposits they might not get a loan.

David White / Tips

ANZ is the latest bank to tell would-be buyers with less than 20% deposits they might not get a loan.

ANZ says it is “on hold” on some low deposit loan applications for aspiring home buyers.

He said the move was a response to Reserve Bank (RBNZ) restrictions designed to limit bank lending to borrowers with less than 20% deposits.

On Friday, the Bank of New Zealand stopped lending to homeowners who did not have at least a 20% deposit, unless they are purchasing a newly built property.

On Tuesday last week, Kiwibank warned that some borrowers with existing pre-approvals might find they couldn’t borrow as much money as they had expected.

READ MORE:
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* ANZ lifts most fixed lending rates as mortgages become more expensive

As of November 1, banks can only lend 10% of their new loans to homeowners who want to borrow more than 80% of a home’s value.

The restrictions were imposed by the RBNZ to curb house price inflation, with Governor Adrian Orr calling the prices unsustainable in a speech in November.

Ben Kelleher, general manager of ANZ for personal banking, said the bank was unable to accept new mortgage applications to buy existing homes where the loan-to-value ratio (LVR) was higher at 80%.

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Reserve Bank Governor Adrian Orr expressed concern in August about the situation recent homebuyers might find themselves in, and since then prices have been rising rather than falling.

He said the change had an impact on a relatively small number of ANZ clients, around 10% of home loan applications.

“We want to assure customers that this break is a temporary measure and is necessary to help us comply with the new LVR rules,” Kelleher said.

“For those who may have planned or are in the process of applying and will not qualify now, we encourage them to tell us about other options,” Kelleher said.

“It’s business as usual for everyone, as we head into the busy summer season, we are committed to helping our clients achieve their homeownership goals,” said Kelleher.

He said new construction is exempt from RBNZ restrictions and that ANZ still accepts requests from existing and new customers to build their own homes.

“In New Zealand we have a fundamental problem of supply and demand. Choosing to build and making new construction financing affordable helps increase the housing supply, ”Kelleher said.

Loan Market mortgage consultant Karen Tatterson said the lending restrictions created heartbreaking situations for some budding buyers.

East Auckland-based financial advisor Karen Tatterson said the banks' pause on low deposit lending would be temporary.

Peter Meecham / Stuff

East Auckland-based financial advisor Karen Tatterson said the banks’ pause on low deposit lending would be temporary.

A Kiwibank client with a pre-approved loan was about to bid at an auction ahead of Kiwibank’s move last week, and decided until he had enough certainty of funding to move forward.

“They couldn’t take the risk. It was too dangerous, ”Tatterson said.

Westpac and ASB have stopped accepting low deposit loan applications from all but their own customers, Tatterson said.

Some would-be buyers from well-off families able to support them could bend the rules.

Wealthy families could offer money to their young people to supplement their deposits, she said.

Other options were for richer families to vouch for their youth’s loans or join them as a co-buyer, she said.


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