LVR restrictions to remain: RBNZ
Wednesday Nov 12, 2014
The Reserve Bank has just announced loan to value ratios will continue, in an attempt to quell rapid house price inflation.
Graeme Wheeler, bank governor, released the Financial Stability Report and said housing remained a threat to New Zealand’s economy.
“The financial system faces the same key risks that the financial system faced at the time of the May Financial Stability Report, although the balance of these risks has shifted in the past six months.
“The first of these relates to housing market imbalances. Pressures have eased since the introduction of the loan-to-value ratio (LVR) ‘speed limit’ in October 2013 and subsequent increases in interest rates,” Wheeler said.
“We have always indicated that the LVR restrictions are a temporary measure. The reduction in house price inflation and housing credit growth are welcome developments, along with indications of increased residential building. However, there remains a risk of a resurgence in house price inflation, particularly in light of strong immigration flows.