The Reserve Bank’s new mortgage lending restrictions come into force today, restricting the number of high loan-to-value ratio mortgages banks can lend.
From today banks will be required to restrict new residential mortgage lending at loan-to-value ratios (LVRs) of over 80 per cent to no more than 10 per cent of the value of their new housing lending – meaning most would-be home buyers will need a 20 per cent deposit.
The policy has already hit some first-home buyers. Last week ASB Bank cancelled pre-approvals for low-equity home loans from October 4.
Builders reported inquiries about new home builds had slowed prior to the changes kicking in.
Master Builders’ chief executive Warwick Quinn said he had received calls from builders who had lost clients when the Reserve Bank announced the changes.