Property Investor Loans Under Scrutiny

money imageIt’s no secret RBNZ is looking for suitable measures that target property investors to help cool the Auckland property market. Back in February 2015 property investors awaited news of a measure that would target investors with 5+ rental properties but the announcement did come. However no news is not always good news and there are murmurings of something else in the wind that will potentially affect all investor property loans.

On PropertyTalk a discussion titled ‘Reserve Bank Macro Prudential Tool’ confirms a likely outcome may be Banks needing to hold more capital for all investment property loans and that will more than likely result in Banks upping the interest rate on property investor loans.

Kris Pedersen of Kris Pedersen Mortgages says on his blog it’s impact will be felt more broadly than the 5+ property rule and could be based on:

  • If the mortgage property is not owner occupied or
  • If servicing of the mortgage loan is primarily reliant on rental income or;
  • If servicing of the mortgage loan is at all reliant on rental income

Kris also says in his opinion ‘there is still more upside risk with rates than downside potential’.

April 30th RBNZ reported the OCR remains unchanged at 3.5 percent. This may be of little comfort to property investors if the rumours of a far reaching measure to target property investors is realised. The changes could also be felt overnight on floating loans so watch this space.


This blog article was written for PropertyBlogs by Mobilize Mail.

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