There’s been a lot of discussion around the recent introduction of mortgage restrictions which have hit first home buyers hard as they struggle to put together a 20% deposit.
The Reserve Bank is responsible for financial stability in NZ and because buying a home is the largest financial undertaking in most peoples’ lives they are attempting to stabilise the housing market and in turn the wider banking system and economy.
First home buyers are not the only ones to have their wings clipped though, those already on the property ladder are not immune to the effects of the restrictions either.
When buying big-ticket items such as cars and boats many people in the past have been fortunate enough to be able to top up their mortgage to fund the purchase. Under the new restrictions this is unlikely to be an option for a lot of people as the banks limit their loan-to-value ratio lending across the board, not just for new mortgages.
Like it or loathe it, the knock-on effects of mortgage restrictions are far reaching. Reportedly, enquiries for new builds are down, attendance at auctions has dropped and first home buyers are giving up looking while they boost their savings.
In general finance companies prefer to lend to home owners. If the number of home owners is ring fenced, so too is the lending market. The full effects of the restrictions are yet to be seen but they are likely to touch all sectors of the economy in some way.
Driveline has noticed an increase in new vehicle enquiries over the last few weeks. We’ve been helping a number of clients fund vehicles either by SmartLease or HP. Previously they would have borrowed against their property but are unable or unwilling to do so now.
Once borrowing against property is eliminated as an option, buyers go looking for the next best thing and many end up at Driveline talking through their finance options.
Lance Manins is managing director of Driveline and a vehicle finance specialist. Call 0800 275-374 or email email@example.com for free independent advice or to book Lance to talk at your business group. Read more from Lance »