In all three cases, house prices have continued to climb after DTIs came in.
The Reserve Bank thinks that NZ property prices will go up by about 5% a year over the long term.
And remember, the Reserve Bank is setting the rules. Just two weeks ago, they released a new house price forecast.
It suggests that house prices would go up by 5.4% next year (2025) and 5.8% the year after (2026).
House prices will still go up.
It’ll just happen more smoothly. Maybe you’ll see house prices go up by 5% per year, rather than the 6-7% that happened in the past.
That doesn’t worry me. It’s what I’ve been telling investors to plan on for years.
Can I still get a mortgage from the bank?
The DTIs will have no impact when they come in on July 1st.
It’s not the debt-to-income ratios that will stop people from getting a mortgage. It’s the high interest rates.
The banks are already scrutinising mortgage applications at a 9%-ish interest rate.
Effectively, you can’t get a mortgage higher than 5 - 5.5x your income anyway. And the new rules are 6x your income for homebuyers and 7x for investors.
So, the DTIs are set above what’s currently happening.
Take a look at this graph. All types of borrowers are well below the Reserve Bank’s limits.
We’re basically driving at 50k an hour in a 100k zone. The rules will have no impact.