Investor DTI borrowing limit close

The latest Reserve Bank data released at the end of last month shows about 15% of lending to investors in November was at a DTI of seven – the highest since August 2022.

DTI restrictions kick in for investors when their borrowing exceeds seven times their gross annual income, with banks only allowed to lend to a small percentage of investors above this threshold (around 20% of their new investor loans).

Cotality chief property economist Kelvin Davidson says if the banks aim to keep a 5% buffer between actual lending and the upper threshold of 20% to avoid any risk of Reserve Bank enforcement measures, investors may have already reached their limit.

He says it will be a key factor for the housing market this year, especially as the election nears and capital and Labour’s 28% capital gains tax and possibly interest deductibility become issues.