CBA’s New Zealand subsidiary ASB Bank has increased its minimum deposit requirements for residential property investors, in the face of a still-raging housing market and “unsustainable” demand from investors.

The bank is pushing its LVR requirement from 30 per cent to 40 per cent with immediate effect.

The move follows ANZ New Zealand’s recent decision to also require investors to stump up a minimum 40 percent deposit. It’s an escalation after earlier moves proved inadequate to calm demand - both banks had already increased the investor LVR requirements from 20 per cent in November last year.

ASB chief executive Vittoria Shortt said the stricter borrowing rules had been imposed due to concern that "continued high levels of investor demand are unsustainable."

Shortt indicated the bank decided it could not wait for the Reserve Bank of New Zealand to activate the re-introduction pre-covid LVR restrictions in March (which will require banks to lend no more than 5 percent of their loan books to investors with a deposit of less than 30 percent).

“While we appreciate the RBNZ taking the time to consult, this is about helping Kiwis build their financial futures during exceptionally challenging times so we are choosing to take this step now,” she said.

“The number of applications we’re receiving is at an all-time high, up 70 per cent on this time last year, and while the proportion of first home lending is up, we have observed since COVID-19 a rapid increase in lending for investors. If this increase in investor demand continues it could lead the country down a potentially unsustainable path.”