She says the decision is long overdue
The Reserve Bank of New Zealand (RBNZ) is considering the removal of mortgage loan-to-value ratio (LVR) restrictions in line with its financial stability mandate. Derryn Mayne, owner of Century 21 New Zealand, has supported the central bank’s move as it could help young Kiwis to finally buy their first homes.
Mayne commented that scrapping LVR restrictions is long overdue as the introduction of tight LVR restrictions in 2013 to “cool the property market” forced many people to continue renting properties.
“Within a few years they’d had their desired effect, and the restrictions were subsequently softened. However, Century 21 has been among those in the industry calling for the wider need of LVRs to be reviewed. This proposal then is welcomed news,” she said.
Mayne added that the decision would most likely boost the real estate industry as it allows more people to climb the property ladder.
“Thankfully, the days of requiring a 20% deposit from most owner-occupiers look set to be over. In Auckland, the LVR restrictions have meant you’ve likely needed to save a six-figure sum before the bank could even consider lending you money. Sadly, it created two tiers of young people – those whose families could financially help them into a house and those who couldn’t,” she said.
“This will give every Kiwi a fairer crack at getting into the housing market. What’s more, with record-low interest rates locked in and fairer prices inevitable, it’s set to be an attractive buyers’ market.”
Read more: REINZ backs call for delay for RTA changes
The RBNZ confirmed that it proposed the removal of LVR restrictions to address the economic downturn caused by the COVID-19 pandemic.
Geoff Bascand, deputy governor of RBNZ, said they expect that the move would help banks to continue supporting customers financially, including with mortgage deferrals.
“LVRs were introduced as a macro-prudential financial stability tool in October 2013 and have been adjusted over time. Adjusting the use and calibration of macro-prudential tools in response to economic conditions is how they are intended to be used,” he explained.
