As well as excluding first time buyers from the rules, Labour would exclude areas where there was no need for them.
This story on LVRs suggests to me that Labour totally miss the reason the Reserve Bank is bringing in LVRs. It is not bringing them in to drop house prices in Auckland (even though there could be an impact).
It is bringing them in for financial stability of the banking system. They don’t want banks to have 100% of their portfolios with say only 5% deposits.
If you exclude some regions, then the banks may end up with too high a proportion of loans with little capital.
But the other thing Labour seems to miss, is that there is no universal rule that every loan must have an 20% deposit. The LVR rule is that 90% of their loans must have a 20% deposit. A bank can still do a mortgage on a 5% or even 1% deposit for some of their customers – just not more than 10% of them.
If you exclude say all of NZ outside the main centres and all first time buyers, then you are impacting just 30% or so of the housing market which means LVRs will not work in terms of their roles of protecting the banking system from a crash.