Articles by Matthew Gilligan

New Reserve Bank Lending Rules for Five or More Rentals

Wednesday, February 26, 2014

Did everyone catch the NZ  Reserve Bank announcement today that investors with 5 or more rental properties will be required to be treated commercially by banks?  

Apparently we must be treated as small business owners in risk profile and higher costs for credit paid.  Higher interest rates and potentially lower LVR ratios are possible. This will reduce liquidity in the market more,  on top of  the 20% deposit rules already applied late last year. There is some speculation that it will be applied on a 5 property rule per bank, which would soften the impact for some. This is rough stuff for property investors and will arguably tighten housing supply discouraging bigger investors to participate in construction of larger scale portfolios. It must further spook the market in the short run.  But will likely create some good buying opportunities on the flip side.

You can read the full report New Reserve Bank Lending Rules mainly paragraphs 31-37.