In keeping up to date with developments across the finance industry, the Reserve Bank has announced they have decided to remove mortgage loan-to-value ratio (LVR) restrictions for 12 months. The Reserve Bank’s decision was made in line with its financial stability mandate.
Introduced to protect the stability of the financial system as house prices climbed, the LVR rules placed restrictions on how much of a bank's lending could go to borrowers with a deposit of less than 20 per cent of the value of the property.
In a statement, the Reserve Bank warned the bigger risk to stability was currently a lack of lending.The bank received "more than 70" submissions from the public and industry, as well as approaching nongovernment groups seeking feedback. All of the New Zealand incorporated banks that responded to the consultation were in favour of removing the restrictions.
Good news for First Home Buyers: Removing mortgage loan-to-value ratio (LVR) restrictions for 12 months will aid in helping first home buyers purchase a home.
To see more information on the Regulatory Impact Assessment click here.
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Stephen Robertson
Senior Mortgage Adviser | Manager Auckland Lending
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