Roger Beaumont: Banking Association CEO on the upcoming changes set to impact first home buyers

Changes to lending restrictions are on the cards.

Finance Minister Nicola Willis is welcoming the Reserve Bank consulting with banks on easing loan to value restrictions from December.

The central bank's looking at increasing the new lending limit for first-home buyers and property investors.

Banking Association CEO Roger Beaumont says this is really good - and will give first-home buyers more flexibility.

"They're taking advantage of what I'd call the 'sweet spot' of softer house prices, combined with declining interest rates."

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Episode Transcript

Speaker 1 (00:00):
The Reserve Bank is slightly loosening it's old LVR lending
restrictions for mortgages from December. It's going to kick in
December one. Banks will be allowed to lend twenty five
percent of their book to owner occupiers who have less
than twenty percent equity. At the moment, it's restricted to
just twenty percent of that lending. Roger Beaumont is the
chief executive of the New Zealand Banking Association and with us.

Speaker 2 (00:20):
Hello, Roger, good evening, Heather, Good to be with you.

Speaker 1 (00:23):
It's good to talk to you back. Does this make
sense to you?

Speaker 2 (00:25):
Oh? Look, I think it's a really good move that
will just give particularly first home buyers actually a little
bit with low deposits, a little bit more flexibility in
the market and let banks have a little bit more
flexibility to lend to them.

Speaker 1 (00:40):
Don't mind the flexibility. But the first home buyers is
doing pretty all right, aren't they. Yeah.

Speaker 2 (00:45):
So the data that we have just released shows that
in the first half of the year, of all new
home loans that were taken out, a quarter of them
were first home buyers. And so what I think that
tells us, Heather, is that actually first home buyers are
being pretty smart here and taking advantage of what i'd
call the sweet spot of softer house prices combined with

(01:07):
declining interest rates. So it's a really good time. I mean,
if I was a first time buyer, this is not
financial advice, but as a first time buyer, I'd be
looking really hard at the market right now.

Speaker 1 (01:18):
Yeah, totally. I see. Also, the data that you put
out shows the total number of new home loans was
up nearly six percent, and that's in the first half
of the year. What do you reckon's going on there?
Is that just people switching banks.

Speaker 2 (01:30):
There's definitely some switching activity going on there. I think
it's very competitive for consumers in the home loan market,
and so there's a bit of switching going on, and
although prices are subdued, there is some movement happening.

Speaker 1 (01:42):
I need to ask you about the dreaded triple CFA legislation.
So I've heard that the government is going to roll
on this and it is not going to pass the
retrospective law. What have you heard.

Speaker 2 (01:54):
I haven't heard that at all, But we are waiting
on the Select Committee's report that will be coming back imminently.
As I understand it. So it's gone to the Finance
and Expenditure Select Committee for them to assess and we'll
be waiting on their outcome with their recommendation.

Speaker 1 (02:11):
I mean, it's kind of hard for the government to
change the law retrospectively for just one bank, which is
A and Z.

Speaker 2 (02:16):
Right, Well, it's also changing it for potential issues in
the future. I mean, this is really badly written law
that actually has left this and it's been so chipped
away out over the years to try and fix it
because it was such a dog's breakfast. Frankly, it's just
left this anomaly with this four year period where you know,

(02:39):
banks could be taken to task for a spelling mistake
and a loan document and that's just ridiculous.

Speaker 1 (02:45):
Is it possible? Could the government consider changing I mean,
you guys have a point obviously that the law does
need to be changed. Could the government change the law
for the future, but not retrospectively so that A and
Z still has to deal with the thing that it
has to deal with.

Speaker 2 (02:57):
Well, there is potentially retrospective issues that we're not even
aware of that could come to come to the surface,
and so it's a matter of dealing with it once
and for all to make the law. And you know,
all we're asking is is that the law is consistent
with the way the law is now. So it's just
this four year window that's an anomaly that needs to

(03:20):
be fixed. And as the law is today, you know,
it can be up to the courts to decide what
is a fair and just outcome for consumers.

Speaker 1 (03:29):
Yeah, good to talk to you, Roger. Thank you very much.
Roger Boumont, chief executive of the New Zealand Banking Association.

Speaker 2 (03:34):
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