The Government must urgently close a loophole in loan to value ratio mortgage restrictions which are stopping homeowners from buying new houses before they sell their old one, Labour’s Housing spokesperson Phil Twyford says.
“The Reserve Bank was forced to rush out these rules at the behest of the Prime Minister. In doing so, this loophole was overlooked.
“It means homeowners who need bridging finance between selling their old home and buying their new house are treated as investors because they effectively own two houses for a short amount of time.
“This means they are required to meet the new 40 per cent LVR requirements.
“Major real estate firm Harcourts has called for banks to have greater clarification around these restrictions because they are now reluctant to approve open-ended bridging finance for existing homeowners.
“These restrictions were designed to cool the overheated housing market by reducing the number of properties speculators can buy. These existing homeowners are collateral damage.
“It is bad enough first home buyers have been shut out of the market as a result of the Reserve Bank being forced to implement LVR restrictions to compensate for National’s refusal to build more homes and crack down on speculators – now existing homeowners are being unfairly hit too.
“National must close this loophole urgently before speculators are the only buyers left in the property market,” Phil Twyford says.