Banks will work hard to meet customer needs within new lending limits

In response to the Reserve Bank imposing limits on higher loan-to-value ratio mortgage lending today, the New Zealand Bankers’ Association said banks would continue to work hard to meet their customers’ needs within the new restrictions.

“People should be aware they may be declined loans because of the new restrictions imposed by the Reserve Bank. It’s worth talking to your bank about your individual needs and circumstances,” said New Zealand Bankers’ Association chief executive Kirk Hope.

“While the lending restrictions will adversely affect some businesses and householders seeking low deposit loans, our members are committed to meeting their obligations as registered banks and will comply with the new lending requirements.

“Most small New Zealand businesses raise investment capital through equity in their homes. LVR caps may limit their ability to invest in their businesses.

“The lending limits may also make it more difficult for first-home buyers and home-owners seeking a top-up loan for renovations.

“We have reassured government that as an industry we will respond constructively and responsibly to the new lending limits.

“Our banks are very competitive, and will continue to do all they can to meet the needs of all sectors of their customer base.

Hope added that the real issue is a lack of housing supply in some parts of the country, not the availability of cheap credit.

“While there are positive moves to deal with the supply issue, that will take some time to be resolved. Credit growth, currently at around 5%, is not driving this.”