Home lending restrictions to ease from January

Northeast Valley from Palmers Quarry Garden.
From January it banks will be allowed to lend 20% of their new loans to owner-occupiers with a deposit of less than 20%. Photo: Linda Robertson

Home lending restrictions are to ease from January next year.

The Reserve Bank will lift restrictions on bank lending to both owner occupiers and investors.

From January it banks will be allowed to lend 20% of their new loans to owner-occupiers with a deposit of less than 20%.

That is up from the current level of 15%.

While banks will be able to lend 5% of their new loans to investors with a deposit of less than 30%. Currently, that is 35%.

The Reserve Bank introduced high loan to value restrictions in October 2013 to cool the property market.

They were meant to be a temporary measure and have been tweaked on a number of occasions since their start

A the start of this year the restrictions were changed to allow banks to lend up to 15% of new loans to owner-occupiers to those with a deposit of less than 20%.

While up to 5% of lending to investors is allowable to those with a deposit of less than 35%

The changes have seen first home purchases grow percentage wise while investor purchases have dropped.

Auckland's property market has flattened off over the last 18 months while regional property prices are still roaring away.

Banks face losing their license to operate if they don't stick to the restrictions - a consequence which has meant most lend well under the restrictions.

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