LVR rules an opportunity for P2P

Peer-to-peer lender LendMe is expecting to a get boost as a result of the new, tighter loan-to-value restrictions on investors.

Landlords are now required to have 40% deposit to purchase properties. For Auckland buyers, that is an increase from 30%. It is the first time investor-specific restrictions have been in introduced for the rest of New Zealand.

But non-bank lenders, including peer-to-peer platforms and operators such as Resimac, are exempt from the rules.

LendMe is a peer-to-peer platform that specialises in loans secured by a first mortgage.

LendMe director and chief executive Marcus Morrison said the new rules were an opportunity for his organisation.

Peer-to-peer investors looking to lend money would probably think an investment in the Auckland housing market, even at 70% or 80% LVR, was a safe bet, he said.

“That’s how we look at thigns, is there investor appetite based on the risk profile? We are not governed by the same rules that banks are but we are governed by lender appetite. At the end of the day if there’s 70% LVR on an Auckland-based property, although people speculate there may at some point be a downturn I would suggest that most people’s feeling would be at 30% equity there’s enough room in there that it is unlikely to come down that far.”

Morrison said interest in peer-to-peer investment was also being buoyed by low interest rates.

It is predicted that the official cash rate will be cut again in August.

“There’s a consistent desire to find good yield,” Morrison said. “If they are only getting 2.5% or 3% on deposit at the bank but they can get 7.5% or 8% with us backed by a first mortgage, they are increasingly looking favourably at that.”

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