Small deposit loans shrivel
House-hunters' chances of getting a bank loan with a small deposit have shrunk five times over since new lending rules came into force in October.
But a broker says borrowers are still managing to get their foot on the property ladder through loans from finance companies and parents.
The latest Reserve Bank figures show banks wrote a total of $4.5 billion of new home loans in December, of which $252 million, or 5.6 per cent, was in the high loan-to-value ratio (LVR) - small deposit - category.
That was a huge reduction from September, when banks wrote almost $1.2b worth of high LVR loans.
The Reserve Bank's "speed limits" prohibit banks from allocating more than 10 per cent of their new lending to borrowers with less than 20 per cent equity.
iLender mortgage broker Jeff Royle said he was still securing 90 per cent LVR mortgages through finance company Resimac.
Resimac is not subject to the Reserve Bank's rules, and offers regular bank interest rates on some loans as large as $800,000.
Royle said banks were also showing signs of easing up after the initial crackdown last year.
"I think they've got their numbers under control."
He said the only people being turned away from lending at 80 to 90 per cent were those with blips on their credit records.
"When they were a student they didn't pay their video bill, or gym bill, or something like that. It never used to matter, now it does."
At 90 per cent LVR or higher, the income borrowers had available for servicing the loan was critical, Royle said.
"It's a black and white line, it either works or it doesn't."
However, he said banks would often offer 85 per cent LVR, and roughly half of applicants would borrow from parents to bridge the gap.
"So the client doesn't lose out - they just have to re-jig it a little bit."
The only exemptions for the new rules are Housing New Zealand's Welcome Home Loans, the refinancing of existing loans, bridging finance, and loans for new builds. In December, those exemptions added up to $42m worth of loans.
But the Reserve Bank statistics do not yet include the effect of the new construction exemption - the result of a backdown by the central bank.
Once the details are finalised, the banking sector's lending will fall even further under the new limits.
The Reserve Bank only started tracking banks' aggregate LVR lending in August last year.
The restrictions were designed to help take some steam out of the property market and reduce the risk of a major fall in values.
The central bank's usual tool for slowing credit growth is the Official Cash Rate, which will be reviewed this morning after sitting at its historic low of 2.5 per cent for almost three years.
Most economists expect bank governor Graeme Wheeler will leave the cash rate unchanged today, but prepare the market for the first of a series of hikes in March.