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Reserve Bank regulation hurts first homebuyers

The decision of the Reserve Bank of New Zealand (RBNZ) to raise the high loan-to-value ratio (LVR) will hurt first homebuyers more than investors in the market, according a Mortgage and Insurance Advisor.

Rakesh Bansal, Director Kiwi Mortgages (based in Howick, East Auckland) said that the restrictions imposed by RBNZ would come into effect from October 1, 2013.

“Lending institutions would not be allowed to lend more than 80% of the value of properties (currently banks lend up to 95% or even 100%). Lending beyond this prescribed limit would be restricted to 10% of the total lending of commercial banks and other companies,” he said.

As reported in our recent issues, RBNZ has been considering a number of measures to control the runaway prices in the property market, especially in Auckland, where the demand of houses has been far higher than supply over the past two years.

Bursting bubble

RBNZ Governor Graham Wheeler has been worried that the bubble may burst, creating another crisis in the economy.

Mr Bansal said that the Government’s proposed changes to KiwiSaver were also not perceived by many as a tool to help first homebuyers.

According to him, the continuous growth in property values is primarily driven by Auckland and Christchurch, while most of the other main centres experience higher prices at a slower rate.

Many of the provincial towns had seen some small gains, he said.

“Auckland prices are still increasing, and are 12.8% above last year. The biggest increase ii West Auckland, where prices are now 13.8% higher than they were the same time last year. Auckland City and North Shore are not far behind at 13.6% and 13.5% respectively,” he said.

Helping customers

His Company specialises in arranging home loans, business loans and personal Insurance products and services.

“We are not only dedicated to providing products and services to suit the needs and budgets of customers but are also committed to reviewing their evolving requirements. We look for long-term, enduring and mutually rewarding relationships,” he said.

Mr Bansal said that potential customers are offered an initial consultation (subject to standard business practices) free of cost. He said that he helps customers save money, get the best deals at the best rates and structure their loans with an easy cash flow.

Experience & Expertise

With more than 30 years of experience in the banking sector, both at his native India and in New Zealand, Mr Bansal is aware of the evolving trends in the market, monetary policies and business practices, which enable him to cater to the best interests of his customers.

As a member of the Professional Advisers Association and the Financial Services Complains Limited, he is known for honesty, integrity, dependability and easy accessibility. He said that he works with most major lending institutions and insurance companies, which afford customers freedom of choice and the ability to make healthy comparisons.

Professional Group

“Kiwi Mortgages Limited is a part of the New Zealand Financial Services Group, one of the largest groups of advisers, with sophisticated support systems that enable customers to get the best possible service. We specialise in arranging all home loans for salaried and self-employed people and assist them in their first home, investment, construction, extension and renovation. As well as helping them to restructure or refinance their loans, we offer specialised business loans,” Mr Bansal said.

He said that while it is important to remain loyal towards the bank that has provided loans, it is equally important to consider the options that are available.

“Buying a home is the biggest investment that an individual makes in his or her life. They should therefore get the best deal,” he said.

Insurance underscored

Mr Bansal also emphasised the importance of life insurance and health insurance.

As reported earlier, a large number of Indians remain fatalistic, do not consider health insurance but suffer later along with ailments.

The ever increasing complexities of modern life style expose people to various types of risks, Mr Bansal said.

“Some ethnic groups may be more vulnerable to certain health risks than others but can be lesser inclined towards taking out insurances. This is unfortunate as saving a small amount of money on insurance premium entails exposure to risks which could potentially be a financial disaster,” he said.

He said that people should be adequately and appropriately covered for Life (terminal illness and death) Trauma, Total Permanent Disability, Medical, Income, Mortgage Protection and Premium Cover.

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