Banks care more about income than equity

Mortgage broker Christine Lockie, of LoanPlan, said, provided borrowers met loan-to-value restrictions, banks were putting means, income and cashflow first.

"It would appear that many home owners don't want to risk selling their properties if they are unable to replace their existing home within their affordability.

"Instead they're looking to stay put and renovate. However, often increasing an existing mortgage is not easy even when there is good equity,” she said.

"It's all about affordability and how much cash you have left over at the end of the month. Banks will calculate the ability to repay debt at interest rates of, for example, between 4.85% and 7.65% – each bank has its own assessment interest rates," she said.

"The price rises in Auckland and regional areas have diminished the weight that equity used to carry. Added to this are factors like the Responsible Lending Code that banks must abide by. I would suggest that the banks are no longer what we would call equity lenders — it's affordability, income and lifestyle that count."