Property investors would need a slightly lower deposit under the proposed changes. Photo:
The housing market is not expected to take a hit from proposed changes to mortgage lending restrictions, but it could signal that housing prices will soon stabilise.
The Reserve Bank has proposed to lift the current 10 percent limit on low deposit borrowers to 15 percent of new bank lending from 1 June.
It has also proposed to allow property investors to have a slightly lower deposit, though the proportion of such loans in a bank's mortgage book would stay at no more than 5 percent.
CoreLogic NZ chief property economist Kelvin Davidson said the proposals to ease mortgage loan-to-value restrictions (LVR) were not a surprise, as the central bank had indicated it would loosen mortgage loan-to-value restrictions early next year, but the RBNZ had moved faster than expected.
"I don't think it transforms things on its own, but it will bring some investors back into the market who otherwise might have found things tricky, and also some first time buyers as well," he said.
"At the margins, it adds to demand, and I think is just another reason probably to think that these falls in house prices are about to end, for better or worse, that depends on your perspective."
Rising migration levels, the possibility that the Official Cash Rate hikes would soon ease, a fall and property listings and a tightening of choice buyers and most recently, the proposed changes to the LVR, supported a stablilisation of house prices, Davidson said.
Davidson said although the Reserve Bank had to consult with retail banks before making the changes, he expected they would be pushed through.