ASB backs down on investor lending clamp-down for new builds

ASB has backed down on an investor clampdown on low equity lending for new builds. Photo / File

ASB Bank has backed down on an investor lending clampdown for new builds which could have reduced new housing supply coming into the market.

The bank told brokers last week it would not be approving loans to investors for new builds unless that had at least 40 per cent equity or a loan to value ratio over 60 per cent.

That is despite loans for new builds being exempt from the Reserve Bank restrictions.

Read More

• House prices: Reserve Bank hits go on tough new loan-to-value ratios, warns of housing correcti...
• Liam Dann: Reserve Bank call on LVRs is good news for first-home buyers - NZ Herald
• Is the end in sight for LVRs on home buyers? - NZ Herald
• Lending restrictions could prompt flurry of property investors, warns economist - NZ Herald

The exemption is designed to support an increase in the supply of housing - an important part of reducing house price pressures arising from supply shortages (particularly in Auckland).

But today ASB executive general manager retail banking Craig Sims acknowledged it had not got the balance right.

"We acknowledge that in trying to do the right thing for Kiwis, and for first home buyers, in particular, we may not have got the balance quite right."

He said the bank had made a move today to enable lending of greater than 60 per cent LVR for new build investment properties, under the RBNZ exemption criteria.

Sims said ASB was committed to playing its part in ensuring a sustainable housing market for the benefit of all New Zealanders.

"In November last year, we led the market in support of first home buyers by introducing a minimum deposit requirement of 30 per cent for property investors.

"Earlier this month, in response to continued high demand we increased this requirement to 40 per cent."

Sims said there was a balance to be struck between helping to manage demand while at the same time encouraging housing supply.

"ASB is certainly focused on helping grow New Zealand's housing stock. Earlier this month we announced that we will apply some of the funds available to us under the RBNZ 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."

The Reserve Bank is bringing back loan to value restrictions from March 1 with most investors required to have at least a deposit of 30 per cent.

This will rise to 40 per cent from May 1.

But it has asked mortgage lenders to "respect the 60/5 investor restrictions immediately with all new loan approvals, to ensure that their mortgage lending is consistent with our policy decision."