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Are tighter lending restrictions on the horizon?

Many economists seem to agree that the property market has turned.

While regions are taking the lion’s share of price increases, over the past few months even Auckland’s sleepy market has been showing signs of life. And key factors like low interest rates, unresolved supply constraints and continued migration point to further price growth in the coming months.

ANZ economists recently predicted that national price growth may hit 8 per cent this year compared to last year, while other economists (including Westpac) say average prices could achieve 7 per cent growth.

And it may not be the only cloud on the horizon for first-home buyers.

LVR restrictions are here to stay

Westpac economists expect mortgage rates to start rising again by the second half of the year, as a result (among other things) of the new capital requirements becoming effective from 1 July 2020.

In the meantime, ANZ economists said they “wouldn’t rule out” the possibility that the Reserve Bank could actually tighten its loan-to-value ratio (LVR) restrictions.

“Household debt is already very high, housing affordability is already a significant economic and social problem, and house price rises further exacerbate wealth inequality,” ANZ economists explained. “If things really start to get silly, the RBNZ has the option of tightening up LVR restrictions once more.”

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Although it remains to be seen whether these predictions will be fulfilled, it’s still a good idea not to wait too long before considering your property options.

Looking to purchase your first home this year? Now might be time to research the housing market in your area and see what’s out there that matches your budget and goals. We’ll be happy to work with you to find a mortgage that works for your situation.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.