One financial journalist says "now might be the time to stop dilly-dallying" if you're thinking of buying a house.
It comes as prices stabilise and with an easier time for lenders after the Reserve Bank's proposed changes to LVR settings.
Yesterday, the Reserve Bank said it'll propose to loosen loan-to-value ratio (LVR) or borrowing restrictions, which would make it easier for borrowers to get a home loan.
An LVR, or loan-to-value ratio, is the amount of money a person needs to borrow as a percentage of the total value of a property.
BusinessDesk investments editor Frances Cook told Breakfast that she would be "surprised if the banks weren't pleased with this announcement".
"If this all goes ahead, then it would go ahead from the first of June. So that's all very quick, and it does seem like the Reserve Bank is probably pretty committed to this course of action unless the banks say something they're really not expecting," she said.
Cook said it would "certainly be an easier time to buy a house for a lot of people".
"We saw these restrictions clamped down when the property market was going through the roof, and it worked. The values have fallen so much."
Loan Market mortgage adviser Grant Patten joined Breakfast this morning. (Source: Breakfast)
She said banks would begin to be more lenient with lending to people who weren't actually a credit risk but didn't have the traditional 20% deposit.
"They're still going to want you to have that 20% deposit. But for more people who have a 10% or sometimes even 5%, if you have a steady job, if you have a good track record of savings in other ways, then the bank is more likely to say, 'okay, you're a good prospect you're not a credit risk.' And so they might let you away with a smaller deposit."
The financial journalist said it would be a "smidge" easier for investors as well, with more "trying to get back into the property game" as a result.
A large number of people are also falling behind on their credit card repayments. (Source: 1News)
"It'll go from a 40% deposit to a 35% deposit for them. Still really strict rules on investors but a bit easier. And I think what we're going to see from this is more people trying to get back into the property game."
Average house prices today are still 24% higher than they were prior to the Covid pandemic, according to data released by QV last month.
Cook said "nobody truly knows the future, but that my instincts" are that house prices will plateau "at best" or they "may well start going up again from here".
"A lot of people have been saying: 'Oh, should I wait a bit longer will prices drop a bit further? Can I get that another 5% off.'
"Nobody truly knows the future, but my instinct now is that if you've been on the sidelines hoping to snap up a bargain — hoping to get that last 5% price drop — now might be the time to stop dilly-dallying if you think you can get approved.
"I suspect, at the very best, we're going to see the house prices plateau, but they may well start going up again from here."
The Reserve Bank introduced stringent restrictions on home lending in 2021 after house prices soared despite predictions of falls following lockdowns and the deep financial hit initially expected from the pandemic.
At the time, the bank said: "We are now concerned about the risk a sharp correction in the housing market poses for financial stability. There is evidence of a speculative dynamic emerging with many buyers becoming highly leveraged."
From June 1, the Reserve Bank was proposing to LVR restrictions from:
- 10% limit for loans with LVR above 80% for owner occupiers, and
- 5% limit for loans with LVR above 60% for investors.
to:
- 15% limit for loans with LVR above 80% for owner occupiers, and
- 5% limit for loans with LVR above 65% for investors.
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