The housing market will hesitate for a few weeks once the loan-to-value speed limits are introduced tomorrow before getting back into business as usual, property commentator Olly Newland says.
From tomorrow, banks will have to keep low-deposit lending to no more than 10% of new loans.
Newland said reports that the market was slowing in anticipation was likely as much to do with the school holidays as the new regulations.
“As everyone knows, the property market slows right down over the holidays as frazzled parents try desperately to keep children amused- house hunting being low down on the list for little ones.”
He said once the holidays were over and second-tier and non-bank lenders started offering deposit help, the market would be back in business.
“But with one difference: Higher rents as those first home buyers who do miss out, are forced to rent even longer than ever.”
He said a better way to curb excessive prices would be to offer a different interest rate for home owners and investors.
“Nothing dramatic, maybe a 1% to 1.5% higher rate for investment homes as compared to owner occupier homes. That would definitely slow down excessive expenditure by the over-zealous. It would also feed into rents but rents have been stagnant too long in any event so there is room for movement there.”