We’ve been inundated with calls and emails from property investors wanting guidance with their portfolios following the recent Reserve Bank of New Zealand announcement easing LVR restrictions as of 1st January 2019. It’s been forecast for a while but it is fantastic that it has now happened. We think that the effect will be considerable and will encourage strong interest from both first home buyers and property investors alike.
To summarise the changes to the LVR restrictions:
What this means?
The Banks will now lend to more people wishing to borrow in excess of 80% of their owner-occupied property’s value, and you may be able to borrow up to 70% of the value of an investment property.
When the LVR first eased from 40% to 35%, we saw investors starting to return to the market. This latest news will also bring those, who up until now have not had enough equity in their portfolio to meet the LVR rules, back into the game. With the lack of housing in New Zealand, becoming a landlord remains an attractive option. In Christchurch we are seeing an uplift in rental returns.
This, added to the low interest rates we have been seeing recently, makes it a great time to speak to a mortgage adviser to discuss the pros and cons of breaking your existing loan, if on a fixed rate already, and refixing at a lower rate if a cost saving is evident. The interest rate war has brought with it the lowest rates seen in almost 70 years, and they’re likely to stay low for a time yet!
It’s good practice to review your mortgage frequently to ensure it’s suited to your particular circumstances. A lot can change between buying a home and two, three or even five years down the track. Give the team at Tony Mounce Mortgages & Insurance a call if you want to find out what these new rules mean for you and to see how we can help you achieve your property goals.
The information contained in this article does not constitute legal or financial advice and for informational purposes only.