Liberty Financial chief executive Mark Collins says lending is limited to five times income for loans where the LVR is above 80%.
He says the company will still do loans up to the 90% mark, but they are subject to income restrictions.
Liberty, which also owns Mike Pero Mortgages, had made this move as it was “prudent”, Collins said.
Using DTIs gives the lender a buffer if markets turn or things go wrong.
His view it that the central bank will impose DTI restrictions at some stage (although Finance Minister has yet to approve them as a macro-prudential tool) and it made sense to implement them.
Collins said they had been turning away business.
Loans with deposits of more then 20% are not subject to the debt-to-income restrictions.
Collins said it was getting harder for borrowers as “banks are self-regulating.”
“They made it easy for too long,” but are now making things harder.
Liberty had also changed its pricing so it was sharper on the custom business or specialist lending.
Collins says the lending market missed its traditional Spring bounce and he expects it to stay flat until January.
The Auckland market is tough, but the regions are still doing well.