ANZ and Kiwibank have started lending home loans to people with small deposits.
In November, loan-to-value restrictions were tightened so that banks could not lend more than 10% of their new loans to homeowner borrowers with a deposit of 20% or less.
This led to many potential buyers having their pre-approvals rescinded, and new responsible lending rules introduced the following month made it harder for some to get home loans again.
This week, ANZ announced it would resume lending to existing customers with a down payment of less than 20% of the value of the home they want to buy, provided they have a budget surplus of $2,500. per month.
* ANZ follows BNZ and Kiwibank to ‘suspend’ low deposit home loans
* BNZ stops lending to low deposit borrowers
* Kiwibank withdraws low deposit home loan pre-approvals
Bruce Patten, mortgage adviser at Loan Market, said this was a significant increase in the amount of “uncommitted monthly income” that was previously required.
“You would have to have a pretty decent income to meet the criteria.”
He said the intention seemed to be that any buyer would then be able to afford rising interest rates. The Reserve Bank is expected to further increase the OCR this week.
He said Kiwibank had also started lending to existing customers with a smaller deposit and did not need such a large budget surplus.
Patten said he hoped this would lead all banks back into the low-deposit part of the market. Lenders tend to stay well within the 10% allowance under the LVR rules to avoid breaking the rules.
There were $667 million in loans to people with less than 20% deposit or equity in December, compared to $887 million the year before.
“They all cater to existing customers only, so at least one of the buyers must be an existing customer, with their salary credited directly to an account. They take care of their own customers first.