Reserve Bank Governor Graeme Wheeler’s new home loan restrictions on banks will give him time to pause. Photo / Mark Mitchell
The Reserve Bank’s looming restrictions on low-equity home lending will give governor Graeme Wheeler time to pause and reflect at next week’s monetary policy review.
Wheeler will keep the official cash rate at 2.5 per cent when he releases the monetary policy statement on September 12, according to a Reuters poll of 15 economists. The key rate hasn’t budged since March 2011 when it was cut in response to the earthquakes which levelled Christchurch, although economists are picking a hike to 2.75 per cent next March, rising to 3.25 per cent by September next year.
The central bank’s biggest unknown is the impact its restrictions on high loan-to-value ratio mortgage lending will have on overheated house prices, particularly in Auckland, meaning the regulator will have to wait and see how much it stifles demand. At the same time, fixed mortgage rates have started to creep higher in anticipation of future rate hikes.
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