Dawn chorus: ASB's new build restriction
Biggest home lender won't lend more than 60% of new build's value to landlords, despite LVR exception for new builds; Huge housing demand as FOMO and panic sets in after 20% spike in 4 months
TLDR: Morena. ASB is quietly restricting lending to landlords for new builds, frustrating everyone’s hopes that extra housing supply can improve affordability. The LVR rules exempt new builds for both landlords and owner-occupiers, but ASB will only lend up to 60% for landlords buying new homes.
ASB’s policy reinforces the fears the low interest rates just pump up the value of existing assets to make the rich even richer, while blocking the new building that employs extra people and resources and solves a supply shortage. That’s not how monetary policy and the overall drive to solve affordability with more supply is supposed to work.
Overnight overseas, the inflation fears kept building. Oil and copper prices surged to fresh multi-year highs and dairy prices rose this morning on Globaldairytrade to near seven-year highs. The US 10 year Treasury bond yield rose to pre-Covid levels of almost 1.3%. China is also looking to restrict western access to rare earths needed for sophisticated weaponry such as America’s new F35 fighter jet, the FT-$$$ reported this morning.
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Ka kita anō
Bernard
PS: Thankyou David for the amazing kaka print above from Totaea, which now has pride of place in my office.
The meat tray is genius! On the ASB, I suspect majors banks follow this policy, actually its been operating for a while behind the scenes I think. This is the banks insurance policy to make sure new capacity has some constraint so as not to create any potential downward pressure on houses due to supply. There are more non-bank funds coming to this space but its not preferred by retail depositors as an investment.