What effect will 30 per cent deposits for investors have on Akl house market?

In October the Reserve Bank will introduce new limits on lending to property investors in the Auckland Council area that would require those borrowers to have at least a 30 per cent deposit.

The Reserve Bank said the potential for a sharp correction in the Auckland market has increased since its November report, with investors the key source of new demand for the city, accounting for about a third of new lending in the six months ended March 31.

Early Reserve Bank data suggests investors make greater use of interest-only loans, which might partly reflect their ability to offset mortgage expenses against income tax, and those loans are likely to be more highly geared than owner-occupier mortgages.

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