Making headlines recently in Sydney’s Daily Telegrpah was an article on high LVR lending with bank and non-bank lenders alike reported to be getting more comfortable lending up to 100%. What? I hear you say. Isn’t this the sort of behaviour that got economies in the poo in the first place?

Well, no, not really. Lending to people who didn’t have the ability to repay their mortage because they didn’t have income was actually more of a problem — especially when not making repaymetns became a reality! Would you be brave enough to lend to someone who wasn’t good for it?

Anyway, 100% lending did come to Godzone for a (short) while and even in those heady days the hurdles were pretty tough to get one. For a start you needed an income! Suffice to say that 100% loans were much less risky than lending to someone without income at all mostly because lending principles (like make sure the borrower can repay)were adhered to.

Will 100% lending come back to Godzone? Well, on the face of it you’d have to say ‘No way Jose’ but at least one Ozzy lender is willing to give you the entire purchase price plus associated fees — thats a mortgage of 105%. The main banks over there are thinking about getting in on the act too with ANZ pushing the boat out to 97%. Gutsy stuff from one of the big boys.

All this is relevant to the local market because the big banks here including ANZ, Westpac and ASB are Ozzie owned. Although the markets are quite different, they’ll be talking to each other and keeping an eye on what’s happening across the ditch, mark my words. And while some people predict a further decline in property prices in NZ, prices seem to have stabilised at about 5% below the 2007 peak. Since banks like stability, you never know.

On the other hand lets be honest — if you’ve got the income to pass the lending criteria for a 100% mortgage, you’ve got the income to save a 5% deposit. And thats all you need right now…


About Campbell Hastie

Cam is one half of Auckland based mortgage brokers, The Go 2 Guys.

He makes a living by sharing what he knows about mortgages with people, arranging mortgages for people and then insuring people.

He doesn't claim to know everything about mortgages himself which is why he teamed up with David Mercer — hence the ‘2’ in Go 2 Guys.

He writes posts regularly on his blog and has been told he has an ability to share his knowledge in a simple and sometimes memorable way.

Feel free to comment and ask any questions. Contact Campbell Hastie m: 027 697 7789.

Join me on Google Plus