Are banks treating high LVR customers any differently?

While loan-to-value ratio restrictions were scrapped months ago, advisers say lenders have been slow to change their approach to high LVR borrowers. 

Craig Pope

LVR rules were scrapped in April following the Covid-crisis to boost credit availability during the recession, yet the Reserve Bank's move appears to have had a marginal impact on the lending market, according to anecdotal evidence from advisers. 

Kris Pedersen, of Kris Pedersen Mortgages in Auckland, said: "I wouldn't say [there's been] a huge difference in appetite." He said there was "a bit more in the 80%-90% space".

"They’ve tightened in the above 90% [LVR] to only doing the First Home Loan product, whereas pre-lockdown, there was some funding outside of this up to 95%."

Pedersen said low equity premiums were still in place across the board.

Wellington-based Craig Pope said: "I certainly haven't seen any more leniency towards the low deposit borrowers. It's a real moving target but the usual barriers are still there with banks still preferring to pre-approve their own customers unless there is a live S&P for new to bank customers.

"Our low deposit borrowers are really struggling with the need to have valuations and fast rising house prices making putting in conditional offers difficult."

Some advisers have noted positive changes in recent months, however.

Hamish Patel of Mortgages Online believes loan applications with 10% deposits "are much easier, with pricing much better than three months ago".

"There's a greater degree of flexibility on low LVR, especially around commission and loan term," noted iLender's Jeff Royle.

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