The Reserve Bank of New Zealand sends positive signals for interest rates, stating OCR at peak. Closely followed this with cementing expected changes to loosening deposit requirements. Now banks will be allowed more low deposit buyers opening the doors for first timers. Investors get a small reprieve with 5% less deposit or equity required.
Although existing rental investments also have a sting from tax changes currently, this could be reversed with a change in government. Debt to income looks to tighten any possible gearing up for investors wanting existing homes in a year.
More buyers soon
RBNZ will allow 15% of new home borrowers to have less than a 20% deposit (currently 10% so 50% more) and investors of existing houses will need a 35% deposit or equity, down from 40%.
With a more stable interest rate outlook and looser deposit requirements, more home buyers will be a reality now. I suspect other changes will introduce a lot more first home buyers than investors. As tax rule changes portrayed as closing a loophole start to bite investors pockets. However a change in government may mean a U-turn of this, however next year DTI’s come in.
Debt to Income Coming
The RBNZ has stated that next year restrictions will be in place which will place a upper limit of the lending allowed for residential mortgage from banks. This will be a multiple based on income. Building or buying a new build will be exempt from this quite possibly. This could mean that owners that have subdividable will be on better footing to grow asset base faster.
What should you do next?
One of the delicious aspects of using a smart mortgage adviser is clarity about options. Having visibility of how sweet a path might be gives you confidence to act. Feel free to get in touch if you would like to run some numbers with us, even if you feel it might be very early on.
