WELLINGTON, Aug. 14 — New Zealand’s central bank said Friday that it will maintain current loan-to-value ratio (LVR) restrictions following its annual review of macroprudential policy.
The Reserve Bank of New Zealand’s Financial Policy Committee considered house price developments, the risk profile of recent mortgage lending, financial strain among existing borrowers and the resilience of the banking system, the bank said in a statement.
“Housing risks are currently contained,” Assistant Governor for Financial Stability Angus McGregor said, noting that national house prices have remained broadly flat in recent years, while mortgage lending growth has been modest and higher-risk lending remains manageable.
Under the current settings, which have been in place since December last year, banks can have up to 25 percent of new lending to owner-occupiers with an LVR above 80 percent. For investors, up to 10 percent of new lending can have an LVR above 70 percent.
Debt-to-income restrictions will also remain in place, complementing the LVR restrictions and acting as a safeguard against the buildup of high-risk lending, particularly during periods of low interest rates and strong housing demand, McGregor was quoted as saying.
The central bank said that it will continue to monitor house prices, mortgage lending and broader financial stability risks. The next review is expected in about 12 months, but could be brought forward if conditions warrant.
(Namibia Daily News/Xinhua)
