Loan-to-value ratio (LVR) restrictions put in place by the Reserve Bank of New Zealand (RBNZ) have certainly been a hot topic of late, especially for prospective home buyers who have found themselves on the outside looking in.

The question on many people's minds is: When will the restrictions be lifted, if ever?

The RBNZ placed limits on high LVR residential home loans during October 2013. Mortgages exceeding 80 per cent LVR could account for no more than 10 per cent of the dollar value of all new residential lending moving forward. reported on July 25 that RBNZ Deputy Governor Grant Spencer said it would be during late-2014 at the earliest before the financial institution begins to lift the restrictions on high LVR mortgages.

"All we're saying is that (late this year) would be the earliest," Mr Spencer was quoted as saying.

"I imagine we'd make some further comment on this at our November FSR (Financial Stability Report)."

Mr Spencer went on to say that the restrictions could be phased out in increments instead of removed all at once.

There's no doubt that even incremental lifting would be a positive for home buyers of all stripes, particularly those who have found it difficult to obtain a sizeable deposit, whether for first homes or residential property investment.

The rules were put in place to slow down home price growth in areas like Auckland, however, it has blocked more first-time buyers from the market and created less competition for investors, likely having the opposite effect.

Still, there appears to be light at the end of the tunnel regarding LVR restrictions, and those seeking property investment advice would be wise to consider their options sooner rather than later. With the official cash rate having risen steadily over recent months, taking advantage of current rates may be a more affordable option than waiting.

Here's to your financial independence!

Daniel Carney
Authorised Financial Adviser / Investment Property Expert

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