ANZ Bank New Zealand is going a step further than the Reserve Bank is proposing and will require property investors to stump up with at least a 40 percent deposit.
ANZ's personal banking managing director Ben Kelleher said in a statement that his bank will also be recommending the RBNZ set the loan-to-valuation ratio restriction at 60 percent, rather than the 70 percent level the central bank is currently consulting on.
Its new restrictions won't apply to other residential property buyers including first-home buyers.
The move comes after ANZ experienced record mortgage lending for two months with 32.4 percent of that going to investors and 18.3 percent to first-home buyers.
All the major banks responded when the RBNZ first proposed reinstating LVR restrictions on investors on Nov. 11 by immediately reverting to requiring a 30 percent deposit before lending to investors, even though it won't become a formal requirement until March 1 next year.
The RBNZ lifted previous LVR restrictions in March this year as part of measures to cushion the economy through the coronavirus crisis.
Since then the housing market has rebounded faster and harder than anybody expected with the latest Real Estate Institute of New Zealand house price index jumping 15.3 percent nationwide in the year ended November while prices in the largest market, Auckland, rose 16.2 percent.
"We've been closely monitoring the impact on residential property prices of historically low interest rates, reduced LVR requirements and existing issues with supply and demand," Kelleher said.
Out of reach
"Escalating property prices are putting home ownership out of reach for many Kiwis," Kelleher said.
"The current settings favour property investors particularly over first-home buyers, potentially locking a generation of New Zealanders out of home ownership," he said.
"It's in everybody's interest for residential property prices to be sustainable long-term and for home ownership to be accessible to as many people as possible.
"As New Zealand's largest home lender, decreasing the LVR on residential investor lending is one thing we can do to help bring balance to the residential property market."
ANZ's share of NZ mortgage lending was 30.9 percent at Sept. 30 and home loans accounted for 67 percent of its balance sheet at Sept. 30, up from 63 percent a year earlier.
Chief executive Antonia Watson told BusinessDesk in October she didn't think that exposure to the housing market was excessive.
"Mortgage lending is a pretty solid part of our book. It's well-secured, it doesn't have much capital impost." Banks are required to hold far less capital against housing loans than against business loans.
"I would love to see more demand from the productive economy, but actually, at the moment, housing is where it's at. The more housing lending you have, the more conservative your loan book is because it's so well secured."
