Earlier this week the country’s largest bank, ANZ, announced they now require a 40% deposit to purchase an investment property. This is an increase from the usual 30% deposit which has been the standard for the last few years.
This announcement has been slammed by commentators in the media, and people in social media are denouncing the bank for its move, threatening to discontinue business with the country’s largest bank.
However, I think the move by ANZ is a responsible one and a tough but good decision. The last 6 months has seen record volumes of new lending, volumes which the banks cannot cope with. ANZ statistics tell us a fifth of the record volume is attributed to first home buyers. A third is attributed to property investors.
The trend is taking us on a trajectory that could prevent first home buyers from ever owning a home.
The 40% deposit requirement should see less investor activity in the market, thus, having a subduing effect on demand. How much it will subdue the market is hard to say, but the sentiment is in the right place to ensure most New Zealanders interests are considered for a sustainable long term property market.
I am a property investor myself and yes this will affect me personally, but I think it’s the right move in the bigger picture.
I expect the other banks will follow which has been the trend in recent years for similar announcements.
Now more than ever outlines the value proposition of good mortgage brokers to help navigate the way through the convoluted and complex banking climate.
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