ASB backtracks on investor loan limits for new homes
Thursday, 18 February 2021
ASB has backtracked on a decision that would have made it harder for investors to buy new houses.
From March 1, the Reserve Bank will limit the number of loans the big banks can make to property investors for existing homes, who have less than a 40 per cent deposit or equity in another property.
The Reserve Bank rules exempt loans for new homes. However, ASB wanted to apply the 40 per cent deposit rule to investors buying new homes.
ASB’s decision was opposed by property investors who said it would stifle homebuilding.
**READ MORE:
* Investors plead with ASB's rival banks not to restrict loans for new builds
* Reserve Bank tightens rules on property investors
* NZ's biggest bank imposes stricter deposit requirements on property investors
**
New builds are defined by the Reserve Bank as homes bought either off-the-plan before completion, or homes bought from a developer within six months of being built.
ASB head of retail banking Craig Sims said the bank was committed to playing its part in ensuring a sustainable housing market.
ASB was the first to introduce a minimum 30 per cent deposit requirement for property investors in November “in support of first home buyers”, Sims said.
That was increased to 40 per cent earlier this month, due to high demand, he said.
“There’s clearly a balance to be struck between helping to manage demand while at the same time encouraging housing supply.”
“We may not have got the balance quite right and we have made a move today to enable lending of greater than 60 per cent LVR for new build investment properties, under the Reserve Bank exemption criteria.”
ASB’s move brings it into line with the lending policies of other big banks.
Sims said the bank would be using some of the funds available under the Reserve Bank’s Funding for Lending programme to provide discounted lending for new, energy efficient homes.
“This offer will be available to owner occupiers and investors alike and further details will be available in the coming months,” he said.