The new rules announced today in response to the growing housing market will take affect on October the 1st.
The new rules will:
Require Residential property investors in the Auckland Council area using bank loans to have a deposit of at least 30%.
Relax the existing speed limit for high LVR borrowing outside of Auckland from 10 to 15 percent, to reflect the more subdued housing market conditions outside of Auckland.
Retain the existing 10 percent speed limit for loans to owner-occupiers in Auckland at LVRs of greater than 80 percent.
What this means
Affectively these rules will make areas outside of Auckland attractive to invest in.
The relaxation of the speed limit for home buyers outside of Auckland will mean that banks can let more home buyers buy with a deposit smaller than 20%.
If these new rules have an impact, interest rates are likely to stay lower for longer.
The Reserve Bank will also be establishing a new asset class for bank loans to residential property investors. Banks will be required to hold more capital against this class.
The asset class will take affect from 1st of October with a further phase-in period of nine months for the reclassification of existing loans. More information about this change will be released later this month. This should lead to slightly higher pricing for investment loans.
