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COVID-19: Change in restrictions to assist house buying
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By: Annabel Sheppard
The Reserve Bank has now removed the general restrictions previously imposed on banks that impacted on the banks’ ability to lend especially to those in the first home buyer market.
The restrictions that were initially imposed, resulted in the banks being unable to have more than 10% of its new mortgages with deposit amounts of under 20%.
This restriction made it harder for first home buyers who were not able to save up enough for a 20% deposit enabling them to buy a house. This was particularly difficult when house prices were increasing.
Now that this restriction has been removed from banks’ lending criteria together with a potential decrease in the value of houses, hopefully it will make things easier for people to purchase a house, especially if you are a first home buyer.
The Government’s change of status from Level 4 to Level 3 does mean that people can now inspect properties as well as arrange for building and other specialist reports. Likewise, you can contract furniture removals and therefore it is now possible to settle and move house.
It is still important that if you are looking at buying a house, you look carefully at the terms of your contract to make sure that it allows for sufficient time for you to complete your due diligence and sufficient time to arrange for all steps necessary for settlement to take place and to arrange moving.
We recommend that you seek advice before signing any new agreement for sale and purchase.
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The impact of The Reserve Bank LVR rules for first home buyers
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