house prices

PHOTO: House prices. FILE

The restrictions on the property market are getting tougher as loan to value ratio restrictions come into place.

From today, the amount of lending banks can make to owner-occupiers with small deposits, will be halved to no more than 10 percent.

But despite the tougher lending conditions, one mortgage broker said people shouldn’t expect an immediate cooling down for property.

The Reserve Bank‘s move means fewer people with a house deposit of 20 percent or less will get bank finance.

Now, banks can only apportion ten percent of their lending to that higher loan to value ratio.

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John Bolton from mortgage broker Squirrel said there will still be options for low deposit holders.

“Bear in mind that new builds are exempt, and if you think about a lot of the first home buyer activity these days, it’s actually new builds, off plan, terraced housing, apartments and maybe small houses in some of these new subdivisions.”

LVR lending restrictions are already tighter for investor loans.

The Reserve Bank policy is designed to rein in risky lending among first home buyers who might borrow too much while interest rates are low.

But Bolton said the new rules won’t halt the summer sales.

“If you look at the market at the moment, it’s still pretty hot out there and I think most people sort of feel that when New Zealand gets through this latest run of Covid and we come out of restrictions, there’ll be a bit of a surge, as it has been in the past because there’s clearly a lack of property on the market at the moment.