Reserve Bank of New Zealand plans to undertake a modest easing of lending restrictions as pressures in the housing market continued to moderate, Governor Grant Spencer said Wednesday.
Loan-to-value ratio policies adopted by the central bank helped to improve banking system resilience, Spencer said when releasing the Financial Stability Report.
Housing market policies announced by the government are also expected to have a dampening effect on the housing market, the governor noted.
From January 2018, no more than 15 percent (currently 10 percent) of each bank’s new mortgage lending to owner occupiers can be at loan-to-value of more than 80 percent.
Also, no more than 5 percent of each bank’s new mortgage lending to residential property investors can be at LVRs of more than 65 percent (currently 60 percent).
“The Bank will monitor the impact of these changes and will only make further LVR adjustments if financial stability risks remain contained,” he said.
A cautious approach will reduce the risk of resurgence in the housing market or deterioration in lending standards, Spencer added.
The material has been provided by InstaForex Company – www.instaforex.com
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