That means banks could dole out even more high DTI loans and be within the Reserve Bank’s new rules.
So, the DTIs won’t have an impact straight away.
But at the time the Reserve Bank changes the rules, they also plan to update the LVR restrictions. This will lower the amount of deposit investors need to buy their next property.
The lower deposit rules will encourage investors to get into the market and that could boost property prices.
Once interest rates fall, though, that’s where the DTIs come in.
We won’t be able to borrow as much as we otherwise could.
What’s the impact? It depends on where you live.
In parts of New Zealand (Invercargill, Taranaki) house prices are low, and incomes are healthy.
The average person buying the average home has a DTI of less than 4. So the DTI rules will have less of an impact on those market.
In holiday hotspots (Queenstown, Coromandel), house prices are high compared to incomes. So, there is more scope for DTIs to slow the market down.
Here’s a map of the country, so you can see the estimated DTI in your area:
