First-time home buyers with the ability to service a mortgage were expected to continue to find it easier to buy a house. File photo. Photo: RNZ / Dom Thomas
Debt to income restrictions on home lending are expected to make a big difference to the housing market, as some borrowers will find it much more difficult to qualify for a mortgage.
A new report by property research firm CoreLogic has highlighted a number of changes to house market regulations which will make it more difficult for many to get a loan, while an easing of bank lending restrictions (LVRs) should make it easier for others
First-time home buyers with the ability to service a mortgage were expected to continue to find it easier to buy a house, while investors will find the going tougher with the introduction of debt-to-income restrictions.
"Debt-to-income limits are a big deal," the report said, indicating the changes will make a big difference to how much property investors can afford to finance, especially in expensive areas.
But an easing of LVRs was expected to benefit first-time buyers, as well as investors.
"Soon five percent of new lending is set to be allowed at less than a 30 percent deposit, an easing from the current 35 percent deposit requirement," it said.
A lower minimum deposit would allow existing investors to free up more equity from the rest of their portfolio, although low rental yields and high mortgage rates would remain a challenge for investors looking to buy more properties.
In addition, the Reserve Bank's latest monetary policy statement indicates interest rates will stay high for longer, while the annual rate of unemployment was forecast to continue to rise to about five percent by the end of next year.
This was expected to be difficult for home owners, with about 60 percent of mortgages needing to be refixed at higher rates within the next 12 months.
"Some of those loans won't see much of a change. But others could easily see their mortgage rate go up by 0.5 percent to one percent, maybe more," it says.
On the plus side, the report noted there were many homeowners with a lot of equity in their home.
"Many people don't have a mortgage and there's a big equity buffer out there," it says.
CoreLogic estimated the total housing stock was currently valued at $1.63 trillion, while Reserve Bank's data showed a mortgage stock of $358 billion, implying an overall LVR of about 22 percent.