Category: Investor Loans

Exit strategies

Formulating a robust exit strategy is a critical part of the development process. When assessing an application for a development loan, the credibility of a clients’ proposed exit strategy will be reviewed and assessed in detail. There are several ways a developer can exit a construction loan – the most common strategies being: to sell […]

Macro forecasts and credit availability

NZ’s largest financial institutions including the RBNZ, Treasury and most major trading banks provide forward guidance on NZ house prices as well as wider-ranging macro forecasts for the housing market. While such predictions make for good reading, they are of limited use when making investment decisions. This is because macro forecasts typically fall into one […]

Insurance and risk mitigation

As a builder or developer, you will know that working in construction means being vulnerable to all kinds of risks, many of which can result in compensation claims or financial loss. The inherently unpredictable and dangerous nature of the work means that you, your employees, sub-contractors, and members of the public are all vulnerable to […]

How Will Rising Interest Rates Impact Real Estate Markets in 2021?

COVID-19 triggered a global economic recession in 2020, and central banks across the globe reacted by slashing interest rates – a standard practice to prop up liquidity and stimulate the economy. More than a year later, regulators are still holding off on hiking the rates back up due to the continued effects of the pandemic. […]

Housing Price Rise Triggers Government Response

New Zealand Finance Minister Grant Robertson now requires the Reserve Bank (RBNZ) to consider the impact its monetary policy decisions have on house prices, following a revision to RBNZ’s remit. This has created some significant ripples in the property finance sector. While the Government’s Monetary Policy Committee’s main objectives remain unchanged (targeting inflation and employment), […]

How the new LVR restrictions will impact lending

As has long been forecasted, the Reserve Bank of New Zealand (RBNZ) has now moved to reinstate higher Loan to Value ratios(LVRs). There were no restrictions last year, meaning buyers could potentially purchase a home while putting down a smaller down payment. However, the property market has since boomed, prompting the RBNZ to consult interested […]

What Unconventional Monetary Policy Means for Investors

COVID-19 has caused widespread disruption across global markets resulting in job losses and economic hardship. In response, countries across the globe have been implementing economic policy to soften the blow of the current crisis. In New Zealand, the Reserve Bank’s response was swift, immediately lowering the OCR from 1% to 0.25%, and announcing (what would […]

Market Update and Impact of General Election

The past few months have been a wild ride for those involved in Property Finance. It was only a few months ago that NZ was reeling from nationwide lockdown and mainstream economists were predicting house price declines between 7 and 15 per cent.  However, the New Zealand housing market has fared far better than expected, and many economists and lending institutions (including the RBNZ) are now having to revise their forecasts upward.   It would seem that the strength of the government’s fiscal […]

Loan to Value Ratios: What You Need to Know

The loan-to-value ratio (LVR) is one of the most common and widely used metrics in the world of property finance. For financiers, it is broadly used to manage and mitigate credit risk when creating a loan facility. For property developers and investors, understanding LVRs and their application in credit analysis will provide insight as to the likely challenges you will face when seeking a loan, as well as assist in identifying the best finance partner for your project.   It is important to remember that the simple loan-to-value […]

The Ins and Outs of Lender’s Fees Explained

When developers are looking for a new build partner, they put their project out to tender. The evaluation process that proceeds is an intense and in-depth review of pricing, relevant experience, past performance, technical skills, resourcing, and other relevant factors. It is these factors that ultimately drive the decision-making process for the developer, ensuring that the right builder is chosen for the job.   Unfortunately, many developers forget to apply a similar […]