When the Reserve Bank of New Zealand (RBNZ) introduced the tighter LVR restrictions across Auckland in November last year, many investors might have clutched their pearls and said a few Hail Marys. After all, putting the squeeze on your ability to take out a home loan with a smaller deposit was sure to prevent you from buying, right?
It turns out this hasn't been the case. According to the RBNZ's latest lending figures, investors are still finding a way.
In its recent lending data, the RBNZ recorded just over $6 billion issued in loans over December 2015. Of this, more than a third went to property investors. At a little more than $2 billion, owner occupiers still outnumber investors by approximately 2:1, but this is nonetheless a strong showing.
The reforms have definitely had their intended effect though. Of the $507 million loaned out with an LVR of 80 per cent or more, only about 8.3 per cent of this went to investors. So clearly, people interested in buying rental property are upping their deposits and making it work. But what does that mean?
Considering the LVR restrictions were put in place to hamper growth across Auckland, it'll be interesting to see what happens next. Approximately 65.7 per cent of borrowing by investors was done at an LVR of less than 70 per cent. This means a huge number of people are fronting up capital for deposits on homes in a city where the median value is nearly a million dollars.
Wondering how people are doing it? We bet some professional mortgage advice and expert strategising has been going into their plans! If you want to find out more about how to get ahead even when restrictions are placed on the market, get in touch with the Squirrel team.