Brian Fallow: NZ mortgage boom ushers in danger

The Reserve Bank’s view of the outlook for inflation and interest rates is pretty much unchanged from three months ago.

It is weak enough for it to warrant one more cut in the official cash rate – but not yet.

Among the assumptions underpinning that outlook is that the bank does not expect a repeat of the “wealth effect” dynamics of the mid-2000s, when rising house prices propelled a debt-funded consumption boom as homeowners spent some of the increase in their housing equity.

READ MORE VIA NZHERALD

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A stronger increase than can be explained by population growth plus income growth. Illustration / Anna Crichton

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