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More tools will soon be available to the Reserve Bank as it works with the Government to hammer the out of control housing market.
The Finance Minister has agreed to allow the central bank to introduce “debt serviceability” restrictions to its toolkit.
And the Bank’s preferred option are debt to income limits – those are calculated by measuring the ratio of a borrowers’ total debt in proportion to their income.
They are seen as stopping borrowers from taking on more debt than they can afford.
Governor Adrian Orr has spoken publicly about his concerns about the amount of debt many Kiwis were getting into as they tried to enter the housing market.
Orr had also considered restricting interest only loans, but today says the preferred option is debt to income limits.
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