July 1st brings mortgage industry changes: What to expect.
- New Debt-to-Income (DTI) rules for banks on home lending. Banks will need to follow the new rules from 1 July 2024, for home loans issued from that date onwards.
• Lending to be restricted to 6x income for owner-occupiers and 7x for property investors.
• Calculation includes household income and rental income for investors. Existing debts and property yields impact borrowing limits.
DTI Calculation Examples https://www.rbnz.govt.nz/education/explainers/dti - Loan-to-Value (LVR) restrictions are easing: Tighter LVR rules lowering deposit requirements for investment properties. Investors will only need a 30% deposit to buy an existing property (instead of 35%), 20% for owner-occupiers.
- Changes to the Bright-line Test will affect property transaction taxes: Effective from July 1, 2024, the bright-line test will apply only if a property is sold within 2 years of its purchase. Sales before or after this period can significantly affect tax obligations.
In other news, highlights from Tony Alexander Monthly Survey and Corelogic NZ Housing Chart Pack.
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