The Reserve Bank's new restrictions on highly-leveraged home loans are likely to be a boon to non-bank lenders, which make up a fraction of all mortgages but aren't covered by lending curbs on banks. The central bank expects a drop of up to 15 percent in the volume of home sales and reduce house price inflation by up to 5 percent when it introduces uniform restrictions on licensed banks' high loan-to-value ratio mortgages from September. The proposed changes would cap property investor loans with less than 40 percent as a deposit to just 5 percent of lending and restrict owner-occupiers with less than a fifth down to 10 percent. Those restrictions would only apply to banks and two of New Zealand's larger non-bank lenders anticipate the move will give their businesses a boost in a market where they accounted for just 1.1 percent of $135.37 billion of long-term housing loans as at March 31, down from a peak of 8.7 percent of $97.33 billion of mortgages in December 2007. Resimac Financial Services saw a lift in its loan book after the Reserve Bank first set restrictions on high LVR mortgage lending in late 2013, and New Zealand general manager Adrienne Church says the financier has the capacity to increase lending once again. "People are seeing it as an opportunity in the market," Church said. "It's cyclical - it always is. That's why people came to market and why they left the market." Resimac had $202.2 million of mortgages as at June 30, 2015, a level Church said they've maintained, although "there's definitely an opportunity to take that up a bit this year."
People are seeing it as an opportunity in the market. It's cyclical - it always is. That's why people came to market and why they left the market.Liberty Financial, which owns the Mike Pero Group and also operates under its own banner, anticipates non-banks will see "significant growth" from the restrictions on licensed lenders. Chief executive Mark Collins said his firm was already looking for strong expansion over the next two to three years before the announcement of the latest LVR restrictions, which he says will change the type of business they access. "It certainly is going to increase the amount of business going through non-banks, that almost goes without saying," Colins said. "We're coming off a very low base, so we know even if the whole sector increases quite dramatically it's a very small amount of the market still." Collins said the 60 percent cap for mortgages to property investors was a "very strong message" and he expects to see investors with multiple properties scale back their portfolios to better manage their interest repayments.