Move broadens the firm’s footprint and scale in the Taranaki region
While experts are leaning on the Reserve Bank of New Zealand (RBNZ) to reintroduce loan-to-value ratio (LVR) restrictions, on mortgage lending Quotable Value (QV) general manager David Nagel thinks that it still won’t address the “underlying cause” of the country’s overheated property market.
RBNZ suspended LVR temporarily suspended LVR restrictions for 12 months in May to prevent them from having an undue impact on borrowers or lenders as part of the mortgage deferral scheme implemented in response to the COVID-19 pandemic.
However, RBNZ Governor Adrian Orr said that the central bank is looking into re-introducing LVR limits at a recent virtual conference hosted by the Institute of Finance Professionals New Zealand (INFINZ).
For Nagel, though, reintroducing the restrictions would be “like déjà vu all over again.”
“While I certainly agree that New Zealand’s residential property market risks becoming even more unaffordable for first-home buyers at the rate we’re going, I do wonder if the reintroduction of the LVRs will ultimately do them more harm than good and won’t actually address the underlying cause of our overheated property market,” said Nagel. “The LVRs are effectively a handbrake; they won’t address the underlying cause of our overheated property market, which always comes back to housing supply. Until we sort that out, we’ll be doomed to repeat this cycle. It will be like déjà vu all over again.”
Nagel said that the recent surge in activity in the property market “can be directly attributed to pent-up demand as a result of the LVRs.”
“First-home buyers are looking to make up for lost time, with the added bonus of record-low interest rates,” said Nagel. “A more equitable long-term solution to our current situation would be to focus on housing supply, not lock these people out of the market altogether.”
