Australia New Zealand Bank — the largest bank and lender in the country — is now increasing the minimum deposit to 40% for residential property investors. They announced it on Tuesday, 15 December 2020, and is set to be effective immediately. ANZ’s big move comes right after they found out that 32.4% of mortgage lending goes to the investors, while only 18.3% goes to first-time homebuyers.
ANZ Managing Director Personal Ben Kelleher announced they would likely recommend to the Reserve Bank that loan to value ratios for property investors be set to 60%, instead of 70%. They aim to revitalise and bring balance to the housing markets, which is steadily increasing throughout the country.
Numbers and technicalities aside, what does this actually mean for you as a homebuyer? How can you benefit from it? Know what's in store for you through this blog.
The residential real estate market is very much competitive in New Zealand. While this is good for investors, this isn’t exactly good for regular Kiwis who just want to buy themselves a house. That’s why the higher deposit rate for residential property investments can introduce more housing opportunities for average New Zealanders.
Unlike regular New Zealanders who intend to settle in their property, residential property investors don’t. They just want to increase the prices in the residential areas. Once prices are high, they would sell the property, and gain off profit from it.
House prices have increased by 18.5% for just the past 12 months! This is one of the highest increases recorded over the last few years. One big reason for this is the low deposit rate for residential property investors. As they can simply ‘own’ a property for just a small amount of money, they do this over and over until average Kiwis can’t afford a home anymore.
With increased deposit rates, they may think twice before investing. This gives more affordable housing chances to average New Zealanders. This strategy worked during mid-2016 when housing prices have also increased dramatically. ANZ hopes for this strategy to work this time as well, especially as Kiwis had a hard time purchasing a home due to the pandemic.
Due to lower prices and great housing opportunities, now may be the best time to purchase a home! Kelleher iterated its commitment to bring balance to the housing market, with a big focus on making homeownership affordable to average New Zealanders. They’re also continuing to monitor the long-term impacts of low-interest rates and reduced LVR requirements that were implemented due to the pandemic.
It may be the best time to start your homeownership with ANZ now! Lock in a house for the holidays and start the New Year with your family in your new home. Check out ANZ’s mortgage rates and compare it side by side against other leading banks in New Zealand.
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