It’s 2018 and change is afoot in the banking world. But, don’t worry, we can also expect much more of the same, says Graham.
Firstly, all banks are now lending at 65 per cent on second-hand investment property. This increase came about on 1 February and certainly helps if you are wanting to build a portfolio. Second, it’s good to note that all banks are also lending up to 85 per cent on new build investment properties. Remember, a second-hand property (by the reserve bank rules) is any property that has had a code of compliance for six months or more.
Apartments .... We have one bank in New Zealand who won't lend at all on off-the-plan apartments and another who will go to 85 per cent. Please notice I didn't say who ... ring us and find out.
Another point of interest in the banking landscape is that, in 2018, we will see a continued exit of banks from giving advice in the investment and insurance space. There is big pressure building in Australia for banks to act in the best interest of their clients which is difficult to do when you only have your own products to wedge clients into. This pressure will continue to flow through to the New Zealand subsidiaries. This will have implications for KiwiSaver as well (for example, ANZ, strangely as New Zealand’s biggest bank, is also our biggest manager of KiwiSaver funds).
This news on investment and insurance advice is good news for Velocity and all other independent financial advisers. Our place with multiple product suppliers is what will continue to be demanded and expected, not just by the market, but also the regulators.
Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A Disclosure Statement is available free of charge upon request.