ASB, the Commonwealth Bank’s Kiwi subsidiary, is not waiting for the Reserve Bank to bring back loan to value restrictions, and has moved immediately to increase the minimum deposit required from investors.
“Our focus at ASB is on working with the Government on offering first home buyers opportunities to get onto the property ladder. That’s why we’re immediately committing to requiring investors to have a 30 per cent deposit rather than the current 20 per cent,” said ASB’s Chief Executive Officer Vittoria Shortt.
“Pre-approvals already in place are unaffected."
“The number of applications we’re receiving is at an all-time high, up 70 per cent on this time last year, and while the proportion of first home lending is up, we have observed since COVID-19 a rapid increase in lending for investors. If this increase in investor demand continues it could lead the country down a potentially unsustainable path," she said.
Other banks are expected to follow.
The RBNZ announced on Wednesday that it would bring back LVRs in March 2021 – two months earlier than originally scheduled when they were lifted due to COVID.
The Kiwi housing market is in a boom that has accelerated since the pandemic. The Real Estate Institute's (REINZ) latest figures show a year-on-year house price increase of 19.8 per cent, with more than 283 properties sold every day in October.
REINZ chief executive Bindi Norwell told RNZ October 2020 would go down in "housing history … as being the point in time when Auckland region's median house price hit the million-dollar mark... something no one anticipated or expected just six months after the entire country came out of lockdown."
Prime Minister Jacinda Ardern weighed in yesterday, saying: "It just cannot keep increasing at the rate that is."
"Obviously we want to ensure our first home buyers can get into the market that is something that is top of mind for us..."