ASB U-turn on investor new builds

ASB has backtracked on plans to impose LVR restrictions on new build investor loans. 

The bank has reversed its decision to reject new build loans above 60% LVR, following a backlash from investors and advisers.

ASB told TMM Online it "may not have got the balance quite right" on its lending criteria.

The lender announced the U-turn in a note to advisers yesterday evening. It will now lend to investors on new builds above 60% LVR, "effective immediately".

The big four bank will lend up to 85% LVR for new homes, with owner-occupiers and landlords alike needing a 15% deposit.

ASB's decision to limit new build investor loans had angered the investor community, with financing for new homes exempt from the Reserve Bank's freshly-tightened LVR restrictions.

Craig Sims, ASB's executive general manager for retail banking, told TMM Online that the initial decision to stop backing investor new builds above 60% LVR was partly a response to "continued high demand".

But he recognised the bank had gone too far. 

"We acknowledge that in trying to do the right thing for Kiwis, and for first home buyers in particular, we may not have got the balance quite right and we have made a move today [Feb 17] to enable lending of greater than 60% LVR for new build investment properties, under the RBNZ exemption criteria."

Sims said the bank had also tapped into the Reserve Bank's Funding for Lending Programme to provide discounted lending for "new, energy efficient homes", which would be available to owner-occupiers and investors.

Sims said further details on the discounted funding would be available in the next few months.

The big four banks and Kiwibank have announced they will continue to provide new build investor loans above 60% LVR.

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