Amber Haddock "Reins loosen on banks' low-equity home loans"

Blog 12

Richard Meadows article published by the Dominion Post outlines The Reserve Banks strange hold on low equity home loans starting to loosen. Meadows believes that this could be good news for those who have been effected by the LVR restriction laws implemented in Oct 2013 and may be able to get themselves into the property market. The Reserve bank have set limits for banks to allocate no more than 10% of their new lending to those with less than a 20% deposit. “To avoid running foul of the central bank, major lenders have slashed their high LVR lending to a small fraction of their total loans”. LVR lending reached an all time low of $147 million dollars in January as opposed to $1.19 billion dollars before the LVR restrictions were implemented in 2013.

The reserve bank set a speed limit of 4.8 % to new lending and was well under showing January’s figures. One thing that has not been taken into account when stating figures is exemption for loans for new builds. Jeff Broker a lender broker mentioned that banks are starting to ease and lend to the ‘right people’ which in turn means cherry picking, banks are not interested in a big deposit from parent or sources but more inclined to lend to those with a history of saving, In August last year The Reserve Bank started tracking the banks LVR lending with concerns of becoming a risk to the financial sector. A major drop in property values could become of concern for the bank creating instability and exposure to borrowers. The reserve banks main idea around limiting credit growth is because of the official cash rate, which was raised last month.

Main focus point featured in the article: The banks lending is becoming more flexible to those who can prove history of saving.

This article relaeased by The Dominion Post relates to Welly Real estate because banks are becoming more lenient on lending restriction, which in turn means that buyers are becoming less scarce.

Advise to Welly Real estate based on this article would be to get there company out to the public eye by the way of advertising and market to increase the clientele base as restrictions are becoming more flexible more people are willing and able to buy into the property market and Welly Real estate could be of help to them.

Works Cited

Fairtax, NZ. “Reins loosen on banks’ low-equity home loans". Dominion Post. 20 April. 2014. A3. Print