The latest Reserve Bank statistics for January show that the banks’ level of lending to borrowers with a deposit of less than 20% dropped yet further in the month, from 4.7% in December to 3.8%.
They have to restrict it to less than 10% of their new lending.
David Windler, of the Mortgage Supply Co, said a difficult situation had developed where banks were starting to become more willing to lend to low-deposit borrowers because they realised they were well under the target – but did not want to communicate that too widely and open the floodgates.
“Advisers are perfectly placed to be the go-to source,” he said.
Many banks have taken a few months to get to grips with the new rules but were now finding they had space to lend, he said. But consumers did not understand the situation. “Borrowers have not got a very strong idea of what they can and can’t do.”
He said it was still a matter of shopping around – a lender who turned down a low-deposit borrower one week might find the next that they did have the capacity to lend after all.
Windler said advisers could approach six or seven possible lenders on a client’s behalf and find out who had capacity.
“For good applicants, more lenders are seriously considering lending to them.”
Windler said he was also processing more Welcome Home Loans, even in Auckland. “Changes in the income and property price limits have helped.”
Bruce McLachlan, of The Co-Operative Bank, said his bank had noticed a very sharp reduction in demand because of the publicity about the loan-to-value restrictions. “So many believe that unless they have a 20% deposit, there is no chance. The Reserve Bank has restricted supply and the media and publicity has reduced demand. It’s not like we’re turning a lot of people away.”
He said his bank did about 6% lending to low-deposit borrowers in January.
