Back
29 Jan 2014
RBNZ’s macro-prudential controls working, RBNZ rate hike delayed?
FXstreet.com (Bali) - Judging by the contraction in overall housing finance in New Zealand, it appears safe to say that the implementation of high loan-to-value ratio (LVR) mortgage lending by the RBNZ is yielding very positive results for the interest of the Central Bank, which is no other than to cool down the housing market in the country.
According to the latest stats made available by the RBNZ, there has been a very significant decline in the 80%-plus LVR mortgages issued.
As Interest.co.nz reports, "as of October 1, according to new Reserve Bank rules, all banks were limited to committing no more than 10% of their new lending to mortgages exceeding 80% of the value of the property being bought; in December there was a total commitment of new mortgage lending by the banks of $4.509 billion; of this, $4.258 billion was on properties with an LVR of 80% or below, while just $252 million was committed for so-called high-LVR loans (above 80%). Some $42 million worth of mortgages for loans above 80% but exempt from the new rules were also advanced."
Interest.co.nz adds: "In total the banks’ share of high-LVR lending before exemptions was 5.6% and 4.7% after exemptions… And those figures compared with 12.7% (before exemptions) and 11.7% (after exemptions) for October."
The data is quite compelling and it demonstrates that the RBNZ’s macro-prudential controls on mortgage lending are having a positive effect in reducing lending availability for buyers in the inflated New Zealand housing market. The stats follow weak home sales from earlier in the month. The data should be interpreted as slightly bearish for the New Zealand Dollar on expectations that the RBNZ may delay interest rate hikes as price speculation on NZ housing market potentially recedes or slows down.
According to the latest stats made available by the RBNZ, there has been a very significant decline in the 80%-plus LVR mortgages issued.
As Interest.co.nz reports, "as of October 1, according to new Reserve Bank rules, all banks were limited to committing no more than 10% of their new lending to mortgages exceeding 80% of the value of the property being bought; in December there was a total commitment of new mortgage lending by the banks of $4.509 billion; of this, $4.258 billion was on properties with an LVR of 80% or below, while just $252 million was committed for so-called high-LVR loans (above 80%). Some $42 million worth of mortgages for loans above 80% but exempt from the new rules were also advanced."
Interest.co.nz adds: "In total the banks’ share of high-LVR lending before exemptions was 5.6% and 4.7% after exemptions… And those figures compared with 12.7% (before exemptions) and 11.7% (after exemptions) for October."
The data is quite compelling and it demonstrates that the RBNZ’s macro-prudential controls on mortgage lending are having a positive effect in reducing lending availability for buyers in the inflated New Zealand housing market. The stats follow weak home sales from earlier in the month. The data should be interpreted as slightly bearish for the New Zealand Dollar on expectations that the RBNZ may delay interest rate hikes as price speculation on NZ housing market potentially recedes or slows down.