Environment remains tight due to the COVID-19 pandemic
ASB has decided to ease its criteria for owner-occupier and investor lending, offering investors up to 80% loan-to-value ratio (LVR).
ASB now allows investors to borrow up to 80% LVR, owner-occupiers up to 90% LVR, and owner-occupiers with construction properties up to 85% LVR. However, lending with LVRs over 85% requires a minimum committed monthly income of $900.
According to a report by Good Returns, the credit policy changes apply to all new applications or if a current approval needs to be extended.
Advisers have welcomed ASB's announcement, noting that the environment remains tight due to the COVID-19 crisis.
“This is great news, and we hope to see more of this as time goes by. It would also be good if [ASB] opened up the policy on up to 90% LVR with an investment, probably in the future,” a broker told Good Returns.
Read more: Banks tighten lending criteria for new borrowers
Meanwhile, other banks have continued to tighten their lending criteria for new borrowers, refusing to process applications from new borrowers with above 80% LVR despite the removal of LVR restrictions in May.
Advisers revealed that lenders are focusing on existing customers and processing hardship and deferral requests rather than accommodating higher-LVR borrowing, and they are also becoming stricter on increasing debt on existing customers.
“I've spoken to a number of lenders, and they will not take on a 90% under-occupied loan where the client already has an investment property. Adding in the fact that over 80% requires existing customer status makes it extremely difficult,” said Edge Mortgages founder Glen McLeod, as reported by Good Returns.
Edge Mortgages was named as the Best Mortgage Brokerage Firms in New Zealand. Read the full report here.
