A leading New Zealand estate agency has said that recently revealed mortgage restrictions, due to come into force on 1st October, will do little to stem the country’s rising house prices.
Auckland NZ – Source: picstopin.com
Instead, Harcourts New Zealand says that first home buyers will be penalised by the Government’s decision to introduce loan-to-value ratio restrictions.
The company’s CEO, Hayden Duncan, says the restrictions will have no impact on the real housing issue of low supply, stating that those who can afford to pay more will continue to do so.
“It is not high loan-to-value ratios, or first home buyers, who are causing property prices to rise. It is simply the fact New Zealand, and particularly Auckland and Christchurch, do not have enough housing stock to meet the demands of our population and investors,” Duncan said.
“This answer is reducing development fees and building costs and speeding up the consents process. The government should be looking to the source of the problem, not putting restrictions on the people who can least afford them.”
The restrictions will reduce the amount of high loan-to-value (LVR) loans banks can offer, making it more difficult for people to get a mortgage with a deposit of less than 20 per cent.
Marcus Williams, CEO of Mortgage Express – the largest non-franchise mortgage advisory service in New Zealand – says that there has already been strong interest from second tier lenders to assist clients to meet the new requirements through caveat lending; only banks are affected by the new restrictions.
“Although this will make it more difficult for first home buyers, there are ways to meet the new LVR restrictions,” said Williams.
Other options for those unable to meet the restrictions include personal loans and family member guarantees, which mainstream banks have already indicated they will accept.