Finance Minister Nicola Willis has welcomed the Reserve Bank’s intention to relax restrictions on lending, making it easier for first home buyers to get started.
“Home ownership is part of the Kiwi dream,” Nicola Willis says.
“Relaxing the restrictions on the amounts banks can lend will make it easier for Kiwis to get a foot on the property ladder.”
The Reserve Bank announced today that it was consulting with banks on easing loan to value (LVR) restrictions from 1 December this year.
“Presently, only 20 per cent of the new loans banks are allowed to make to owner-occupiers can go to buyers who have deposits of less than 20 per cent of the value of their properties.
“The Reserve Bank is proposing to increase that limit of new lending to 25 per cent. That will make more funding available to first-home buyers.
The Reserve Bank is also proposing to increase the amount banks can lend to residential property investors with deposits of less than 30 per cent of the value of their properties from 5 to 10 percent.
“The proposed change follows the Reserve Bank’s introduction of debt-to-income (DTI) restrictions last year. The Reserve Bank’s view is that the introduction of DTI restrictions increases the resilience of the banking system and means LVR restrictions can now be eased.
“I look forward to hearing the outcome of the Reserve Bank’s consultation with the commercial banks.”