RBNZ ease LVR restrictions – TDS

The twice yearly RBNZ Financial Stability Review saw  the RBNZ ease LVR restrictions, effective 1 January 2018 and comes on the back of easing in house prices, explains the research team at TDS.

Key Quotes

“The adjustments would allow banks to make more low-deposit loans to owner occupiers (mortgage lending to owner occupiers with LVRs of more than 80% to increase from 10% to 15% of new loans), and there is a decrease in the down payment of mortgages for investors (deposit reduced from 40% to 35% but cap of 5% on these loans as a proportion of new loans). Governor Spencer pointed out that the Bank would monitor the impact of these changes and would make further adjustments if financial stability risks remain contained.”

“The Bank pointed out that low interest rates have contributed to greater risk appetite but unwinding of unconventional monetary policies remain a risk. The Bank also noted that the financial system remains resilient following the 2017 bank stress test.”