BNZ stops lending to borrowers with low deposits
Chris McKeen / Stuff
The BNZ tightens its lending policies.
BNZ has stopped lending to homeowners who don’t have at least a 20 percent deposit, unless they’re buying a newly built property.
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. Investors face a more stringent requirement. A BNZ spokesperson said the LVR rules prompted the bank to change its lending policies.
“Customers who buy an existing property as an owner-occupied home will now need a down payment of at least 20% across the board.
“We are continually reviewing our loan policies and will work with any affected client to help them assess the different options they may have. BNZ continues to lend on new homes with a deposit of at least 10 percent.
* Kiwibank Withdraws Low Deposit Home Loan Pre-Approvals
* Bank of Mum & Dad is the only bank in town for some first-time home buyers
Mortgage consultant Dave Windler, of Mortgage Supply co, said people who have applied but have not yet been approved are also affected. “Considering the average turnaround time of 10 business days, that’s a whole bunch of disappointed customers.
He said existing pre-approvals, which would normally be renewed if a buyer had not found a property, would also expire.
“The environment for first-time homebuyers to have a good range of options available to them for getting proper mortgage financing is as bad as I’ve seen it.
Econ Talks – Will the Bipartite Housing Approach Solve the Housing Crisis?
“This is part of a larger credit crunch environment that is at play almost everywhere.”
He said the non-banking sector was also under pressure, as people who couldn’t get loans from traditional banks looked elsewhere. “If you consider this to be the thin end of the wedge, it could be in play for a while. This must have a ripple effect on the real estate market, especially in the development sector.
“There’s a lot going on that will put pressure on the market and first-time homebuyers to rent longer – they won’t have the capacity to do what they want to do. It is a very difficult credit environment, it has not been so tense since the global financial crisis.
Earlier in the week, Kiwibank also put the brakes on low deposit lending.
He said he would only honor existing pre-approvals for deposits below 20% if the offer was accepted before last Friday night.