PHOTO: Photo: RNZ / Claire Eastham-Farrelly
The Reserve Bank is willing to ease the loan-to-value restrictions (LVR) on bank property lending as long as it does not compromise the integrity of the financial system.
A review of the LVRs said they had been successful in cooling house prices and growth in household debt, as well as reducing the risk in the banking system from risky lending.
Retail banks are required to have no more than 20 percent of mortgage lending to owner-occupiers with less than a 20 percent deposit, and no more than 5 percent of their lending to investors with less than a 30 percent deposit.
The central bank has reviewed the five year old policy, which was initially described as temporary, and said it has improved the stability of the financial system, but also had some downsides
“The LVR policy is likely to prevent some households that wish to purchase housing from doing so, which is part of the process of safeguarding financial stability.
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