Property investors will need a 40 per cent deposit

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    Property investors will need a 40 per cent deposit under tough new restrictions revealed today.

    Restrictions to lending limits on residential properties are also being extended nationwide.

    The new rules are being urgently introduced in an attempt to put a lid on New Zealand's spiralling property prices.

    Reserve Bank Governor Graeme Wheeler has outlined the new rules this morning, and told banks they will be expected to act immediately.

    The new loan-to-value ratios (LVRs) would take effect on September 1, but the Reserve Bank wants banks to "observe the spirit of the new restrictions" in the lead-up to the new policy.

    All the major banks said they were supportive of the move.

    "Once we have fully reviewed the proposal and its implications we will work with the RBNZ to implement the changes before they come into effect on 1 September," a Westpac spokesman said.

    New rules - to begin September 1

    • Restrictions for investor lending extended from nationwide from Auckland only
    • Banks will be forced to require a 40 per cent deposit - up from 30 per cent - for at least 95 per cent of the loans they make in this area.

    Home buyers
    • Restrictions for owner-occupier lending extended from Auckland to nationwide.
    • Required deposit level remains at 20 per cent for at least 90 per cent of bank lending.

    - The exemption allowed under the current LVR policy will continue to operate, including for construction lending and major non-routine repairs of dwellings
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