How LVR Restrictions Hurt First Home Buyers

ASB cancels pre-approved loans

MARTA STEEMAN

23/09/2013

ASB Bank has apologised to disappointed customers after cancelling all its low-equity mortgage pre-approvals.

The bank sent a note to brokers this morning, advising them that those hoping to borrow with a deposit of less than 20 per cent would have pre-approvals withdrawn on October 4.

It refused to say how many pre-approved loans and people were affected, citing commercial sensitivity.

ASB’s general manager product and strategy Shaun Drylie said the new Reserve Bank restrictions were to blame.

From October 1, all banks will only be allowed to lend 10 per cent of their new loans to borrowers with deposits of less than 20 per cent.

“ASB, like all New Zealand banks, has to comply with these restrictions under our conditions of registration,” said Drylie.

“We appreciate that this will be disappointing for customers who are impacted and we apologise for any inconvenience caused.”

Read the rest here

http://www.stuff.co.nz/business/money/9198872/ASB-cancels-pre-approved-loans

Posted in News & Articles | 1 Reply

One thought on “How LVR Restrictions Hurt First Home Buyers

  1. If I read this and understood it correctly , would the following scenario clarify this. …. First home buyer struggles to get a preapproval at 90 percent. Obtains one at 80% and goes house hunting. While house hunting, interest rates start creeping up unknown to first home buyer. Auctions are ruled out because kiwisaver money withdrawn is only available a few weeks after the dating of a sale and purchase agreement. A deposit is required for the sale and purchase but kiwisaver money is not available to pay it. That rules out auctions for first home buyers. Over 80% 0f all house sales in auckland are therefore ruled out. Finally finds a house that is slightly over the limit at say 80.5% and the finance has been pulled. I reckon a stock of rentals should be available for first home buyers now but look….immigration is up and they are taking all the rental properties by storm whilst trying to find their feet in the country. Fun times ahead indeed. I see yield yield yield!!!!!

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