If RBNZ Governor Graeme Wheeler really wanted to cool the city's property prices quickly he would have introduced the change right away - and perhaps made the LVR 50 per cent. However, one must give the chap credit for doing something to help level the playing field.
It will put the banks in a good position if and when the Auckland market "corrects" itself - their risk will have been reduced to 70 per cent of the property's value, giving them plenty of headroom before risking negative equity.
Before the LVR announcement it looked like Wheeler would lower interest rates on June 11. A second cut was also being predicted by bank economists for July 23. But will the higher LVR announcement change this? Perhaps he'll lower rates in October.
Last year, Wheeler took the official cash rate up 1 per cent to 3.5 per cent and a few of us wondered why. In hindsight, it looks like he misread the state of the economy.
BNZ's chief economist Cameron Bagrie says demand across the economy is still solid yet the reality is that inflation has failed to "show up at the growth party".
"Core inflation has now been below the 2 per cent target for 21 successive quarters. That's enough in itself to justify OCR cuts," he says.
However, all this speculation does put those about about to fix their mortgage in a spot. Should you sign up for a new fixed term now, or hedge your bets to see if a better deal is around the corner? The good news is there is little sign that floating mortgage rates will go up this year.
Sales
Data from the Real Estate Institute shows that 7234 properties were sold in April, with a combined value of $4.238 billion (March's figure was $5.381 billion).
The institute says the national median house price is $455,000, which is $20,000 less than in March. Auckland's median is currently $720,000 - up 18 per cent on a year ago.
There were 1538 auctions during April, 76 per cent of which were in Auckland.
