ANZ offers home loan packages in line with RBNZ goals
(27 May 2013 – New Zealand) ANZ Bank in New Zealand dropped its one-year fixed mortgage rate by 24 basis points for borrowers with a minimum 20 percent equity.
This puts the rate at 4.95 percent, down from 5.19 percent and came into effect on Friday as part of a new home loan package being offered by the bank.
The Reserve Bank of New Zealand (RBNZ) is under increased pressure to address the country’s growing property market by restricting the level of low-equity home loans banks can offer.
Loans where the borrower has a deposit of less than 20 percent - known as high loan-to-value ratios (LVRs) - represent about 30 percent of all new residential mortgage lending in New Zealand.
Such loans are most prevalent among people buying their first home.
The RBNZ now has the ability to require lenders to hold more capital on their balance sheets against certain assets, or restricting low-equity home loans after Finance Minister Bill English signed a Memorandum of Understanding with the RBNZ last week.
The bank regulator has cited rising property values and the growing prevalence of low-equity lending as threats to the country's financial health.
According to Treasury forecasts, house price inflation will rise to 7.1 percent in the 2013 and 2014 years, compared to a peak of 6.5 percent so far this year, before slowing to between negative 1.3 percent and plus 1.6 percent over the following four years.
Last week the International Monetary Fund (IMF) said the New Zealand housing market was overvalued by about 25 percent and if it continued to rise, the RBNZ would be forced to hike interest rates.
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