PHOTO: Photo: NZ Super Fund
Limits on risky mortgage lending are to stay unchanged, with the Reserve Bank saying debt levels in some sectors are still high and warning that insurance and finance companies need to increase their capital levels.
In its six-monthly Financial Stability Report, the Reserve Bank (RBNZ) said the loan-to-value ratios (LVRs) had helped to cool the housing market and debt growth but risks remained, and the restrictions were still needed.
“The current LVR settings remain appropriate for now, with any further easing subject to continuing subdued growth in credit and house prices and banks maintaining prudent lending standards,” RBNZ governor Adrian Orr said.
LVRs restrict banks from lending any more than 20 percent of their lending to first home buyers with less than a 20 percent deposit, and no more than 5 percent for residential property investors with less than a 30 percent deposit.
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