PHOTO: RBNZ says it’s concerned about the risk a sharp housing correction could have on financial stability (file image). Photo: Dom Thomas
The Reserve Bank has confirmed it will reimpose loan to value ratios (LVRS) from 1 March at 20 percent for first home buyers and 30 percent for property investors.
The bank said lenders would be limited to no more than 20 percent of their lending to owner-occupiers with less than a 20 percent deposit.
Lending to property investors would be limited to no more than 5 percent with less than a 30 percent deposit, which would rise to 40 percent from May.
RBNZ deputy governor Geoff Bascand said there was evidence of speculation and growth in heavily indebted people, which would threaten financial stability if there was a sharp housing downturn.
The LVRs were suspended at the start of the pandemic to ease the pressure on banks.
“Since then, in part due to the success of the health and economic policy responses, we have witnessed a rapid acceleration in the housing market, with new records being set for the national median price, and new mortgage lending continuing at a strong pace,” Bascand said.
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