LVR loosening: advisers react

Rules were loosened by the central bank today for both investors and owner-occupiers. Banks will be able to provide 20% of their owner-occupier loans to borrowers with a deposit of less than 20%. While lenders will be able to allocate 5% of new investor loans to borrowers with less than a 30% deposit.

Jenny Campbell of the Mortgage Supply Company predicted a boost in business, but said conservative lending behaviour was unlikely to change.

She said: “We picked the LVR’s may be loosened for First Home Buyers, and so were surprised to see the tweak to the investor rules being announced as well. Advisers are crazy busy right now – this could well be a ‘perfect storm’ – lots of house stock on the market, amazing low rates, and more now more lending available for First Home Buyer loans.”

She expects banks to remain tight: “Banks haven’t eased their lending restrictions at all (even their stress rates are being left alone – even though rates are dropping), so although there will be more capacity to lend – actually securing the lending will still be tricky!”

Campbell adds high LVR investor loans “will be hard to secure”, and believes “demand will well outstrip supply”.

Kris Pedersen of Kris Pedersen Mortgages expressed doubts over whether the central bank’s decision would lead to increased business for advisers. He told TMM Online: “I don’t think it will generate that much additional business. I do think that there will be a slight uptick in business as this will be the difference for some of being able to purchase another property, however as the servicing side is now so much more difficult than a year ago this will restrain lending volumes.”