Reserve Bank proposes to axe loan-to-value ratios

Author
Newstalk ZB,
Publish Date
Sat, 25 Apr 2020, 5:45PM
Photo / File
Photo / File

Reserve Bank proposes to axe loan-to-value ratios

Author
Newstalk ZB,
Publish Date
Sat, 25 Apr 2020, 5:45PM

The Reserve Bank of New Zealand is proposing to remove loan-to-valuation restrictions on mortgage lending as Covid-19 wreaks havoc on the economy.

"This move will help banks to keep lending to support customers, including with mortgage deferral," the central bank said.

The LVRs, which went through several adjustments, were first introduced in October 2013 to curb an overheated housing market.

There are currently two loan-to-value restrictions in place: banks can only lend 20 per cent of their residential mortgage book to owner-occupiers who don't have at least a 20 per cent deposit and they can only lend 5 per cent to investors who don't have a 30 per cent deposit.

Listen above as Property Commentator Nikki Connors joins The Weekend Collective.

 

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