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ANZ restricts loans to property investors

NZ NewswireNZ Newswire 20/07/2016 Fiona Rotherham

ANZ Bank New Zealand is the second bank to announce it will not take any new loan applications from property investors who do not have a 40 per cent deposit, some six weeks earlier than required by the Reserve Bank.

Westpac Banking Corp made the same move on Wednesday after the central bank said earlier this week it intends having the new lending restrictions in force by September 1 and asked lenders to comply with the spirit of the new regulations immediately.

The regulations extend and expand the demand for a 30 per cent deposit on investment properties in Auckland introduced by the bank last year.

ANZ, the country's biggest lender, said Thursday that its maximum loan to value ratio of 60 per cent for property investors will apply across New Zealand. It was previously 70 per cent for Auckland.

It's also extended the 85 per cent ratio in Auckland owner-occupied homes across New Zealand.

The bank said it intends honouring all existing pre-approvals but any renewals will be subject to the new policy.

It said in a statement the changes were "a sensible and responsible response to market conditions."

The move follows comments on Wednesday by the bank's chief executive David Hisco that property prices in Auckland were over-cooked and the ending of the property boom will be "messy".

He warned baby boomers who have become property investors are starting to see more and more rentals where the owner can't find a tenant or the rent doesn't cover the mortgage. He said "it's a matter of when, not if, the market adjusts".

Mr Hisco said the central bank needs to go further and demand 60 per cent deposits, which "will be unpopular amongst investors but it may end up doing them a favour" and mean less business for the banks.

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