Government Housing policy changes – March 2021

by Apr 1, 2021First Home Buyers, Mortgages, Non-Bank Lending, Property investment

Can they work or is there ‘an elephant in the room’?

A lot of comment has been made around the Government’s changes to Residential Property Investment over the last few days, so I thought commentary from me, with nearly 30 years in Property Finance, might bring some clarity.

 

Governments of any political persuasion should stay out of the property market, as they do not have the skill set or experience to meddle and often end up hurting those they are trying to protect. That is certainly the case this time and here are my reasons why.

 

1. By increasing the so called ‘Brightline Test’ (this is the number of years an Investor must hold a property before selling, without paying tax on the profits) to 10, the Government have further restricted supply, as Investors will hold onto their property for longer.

2. Landlords are facing fairly hefty increases in costs, on top of the healthy homes initiative (which is a good thing) they are now losing the tax breaks which all other businesses enjoy. This will put more pressure to further increase already high rents. This then leads to…

3. Less money to go towards deposit for First Home Buyers. Which leads to…

4. The age of high LVR (loan to value) mortgages for First Home Buyers is here to stay, as deposits are harder to save for and prices will continue to rise.

5. On May 1st 2021, the Reserve Bank will reintroduce its lending restrictions. This is catastrophic news for First Home Buyers, as Banks can only lend up to 15% of their lending book at over 80% loan to value. This is the return of the lottery for First Home Buyers. Whilst I agree with lending restrictions to Investors, I also believe lending to First Home Buyers should be a commercial decision for the banks and non-bank lenders and the Reserve Bank should step away.

6. Finally, as far as we know, most New Builds are exempt from the above. However, we are facing huge shortages of materials, skilled labour is in high demand (therefore higher cost) and some builders are refusing to do fixed price contracts, which is what a bank requires. So the impact of these exemptions will be minimal.

 

Do I have the magic solution?

 

No unfortunately I don’t. However what I do know is that the above changes will result in higher prices, more First Home Buyer frustration and the Government having to find accommodation for 1000’s more Kiwis who will be locked out of the private rental market and unable to purchase.

 

Thank you for reading – I’m Jeff Royle, Financial Paramedic and passionate supporter of First Home Buyers.

 

Contact Us or call 0800 536 337 to find out how we can help.

About iLender

At iLender we put your best interests first and not the Bank – our advice is impartial as all Lenders who we do business with pay about the same in commissions.

Although we are Auckland based Mortgage Brokers, we help customers everywhere in New Zealand and overseas with buying property in New Zealand, as we are very much about online and giving advice here and now!

Government Housing policy changes – March 2021

Can they work or is there ‘an elephant in the room’? A lot of comment has been made around the Government’s changes to Residential Property Investment over the last few days, so I thought commentary from me, with nearly 30 years in Property Finance, might bring some...

What kind of loans can I get with bad credit?

A few financial slip-ups in the past can have a surprisingly big impact on your credit rating. A bad credit rating indicates that you may be a risky borrower, which can make it difficult to get the bank’s approval when the time comes to apply for a home loan....

LVR changes and what do they mean for you?

Background In 2013 the Reserve Bank introduced LVR restrictions to curb a potential overheating of the property market. As a rule, owner occupiers needed a 20% deposit and investors 40%, later reduced to 30%. There was some leeway with banks able to lend a very small...

Getting a home loan: What to do when the bank says “No”

It’s easy to feel discouraged when a bank rejects your home loan application, but it’s important that you do have other options when it comes to securing a mortgage. Non-bank lending can be an excellent option for home buyers who have had their mortgage applications...

Credit searches – What to know before you apply for a Mortgage or Loan

All Lenders use a credit search as part of their assessment of a Mortgage or Loan Application and there are some things that are important to know. Some Lenders use a credit scoring system, some don’t. Credit Scoring Mainstream lenders use a credit scoring system and...

More Reasons To Be Cheerful

Upturn in House Prices… A couple of the major Banks are predicting house prices to increase by up to 7 per cent next year with the property market due to "spring back to life". This is a welcomed announcement as it comes on the back of a fairly quiet winter - so signs...

Can I get a home loan with bad credit?

Getting a mortgage can be challenging if you have bad credit or no credit history. Banks tend to perceive you as more of a risk and are generally less inclined to approve your home loan application.  But that doesn’t mean it’s impossible to get a mortgage. Here at...

The truth about mortgages, interest rates, the housing market and everything else the media likes to sensationalise!

  'House prices down' 'First home buyers finding it impossible' 'Investors exiting the market' Such headlines are gross exaggerations and often blatant misrepresentations of the truth. The Housing Market This is flat, but stable. QV (NZ's leading provider of rating...

Is this a good time to buy?

Auckland mortgage brokers weigh in It’s no secret that the Auckland property market has slowed considerably in recent months. With sales volumes dropping, house prices showing little signs of growth and homes taking longer to sell, it’s little wonder that buyers are...

What is a non-bank mortgage and is it right for you?

When it comes to choosing a mortgage, it’s important to remember that you have other options besides getting a traditional home loan from the bank.  Non-bank mortgages have become increasingly popular in recent years as Kiwis look for alternative ways to get onto the...

Best mortgage rates, 10% deposit owner occupied and 20% rental purchase, self employed with no financials and help for those with bad credit or arrears.

Hundreds of reviews on TradeMe and Google makes us your ‘Number 1’ choice.

Call 0800 536 337