What do the LVR removals really mean for first home buyers in New Zealand?

Following strained economic conditions for the country due to COVID-19, the Reserve Bank recently removed their loan-to-value ratio ‘speed limits’. But what does that actually mean for first home buyers in New Zealand? Will it really make it easier to get a loan? Here’s our breakdown.



The loan-to-value ratios or ‘LVRs’ were the Reserve Bank’s way of controlling how much the commercial banks like ASB, ANZ, Westpac and BNZ could lend.

The banks were only able to provide a certain number of loans that were considered ‘low-deposit’ loans. This meant that it was very tough to get a mortgage with only a 5% deposit as a first home buyer. You would likely need at least 20% of the value of the home you wanted to buy or else the banks would probably say no.

There were also separate and stricter rules for people buying an investment property. They’d need an even higher deposit compared to people buying a home to live in.

The LVRs have been adjusted before, but this is the first time since their introduction that they’ve been removed entirely.



On the surface, the removal of the LVRs looks like it’ll make it easier than ever to get a first home loan. No more speed limits on the banks means there’s no more deposit requirements, right? Not quite.

We’re still living in very uncertain times. The economy is still being impacted by COVID-19. Unemployment is expected to rise and the futures of many businesses are still uncertain.

Banks know that very well, and while LVR restrictions may have been lifted, they still need to be cautious about their lending. Lenders need to be certain that anyone they give a loan to will be able to pay it back comfortably. It’s not just the right thing to do, it’s the legal thing to do as well. And with so many people struggling with their money, low-deposit first home loans are likely to be off the table unless you have good financials.



Unlike traditional banks, non-banks aren’t directly bound by the rules set down by the Reserve Bank. It’s one of the benefits of borrowing through us. But we are still obligated to lend responsibly and that means being cautious in the COVID-19 economy. Lenders of all stripes are going to look extra carefully at any home loan applications at the moment – especially if they are low deposit home loans.



Don’t fret! There are other options available to you. We cover them in our guide to getting a first home loan with less than 20 per cent deposit. We recommend that you start there.



  • The loan-to-value ratios (LVRs) were ‘speed limits’ put in place by the Reserve Bank to encourage the banks away from low deposit loans.
  • Those restrictions have now been removed for 12 months, but that hasn’t necessarily made it easier for borrowers to get low deposit home loans due to the problems caused by COVID-19.
  • If you have a steady job and have good financials, you may be able to take advantage of a low deposit loan.

If you are a first home buyer looking for a low deposit loan, there are still options available to you in the form of Government-backed loans provided through some lenders.


If you’d like to discuss your options for your first home loan, get in touch with one of our lenders on 0800 33 33 20 to get the ball rolling.

This article is solely for information purposes and is not intended to be financial advice. If you need help, please contact Avanti Finance or your financial adviser. Neither Avanti Finance nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any information, representation or omission, whether negligent or otherwise, contained in this publication. References to third-party websites are provided for your convenience only. Avanti Finance accepts no responsibility for the availability or content of such websites.

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