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LVRs still needed - RBNZ

The Reserve Bank’s LVRs are not expected to be a permanent measure but they are not going to be removed in the near future, outgoing Governor Graeme Wheeler said in a speech today.

Wednesday, August 30th 2017, 2:26PM

Removing the LVRs would require Reserve Bank confidence that financial stability risks won’t deteriorate again.

Wheeler said that debt-to-income ratios have risen in recent years, while ongoing strong population growth and low interest rates mean that demand continues to outstrip supply.

“That means there’s a risk of a housing market resurgence and a sharp lift in high LVR lending if LVRs were removed at this time.

'The Bank will continue to review developments, bearing in mind that removal could be made in stages as a safeguard to a resurgent market."

Wheeler’s comments fly in the face of a chorus of calls for the removal of the LVRs, which have come from a range of sources including the Prime Minister Bill English.

Earlier this month, English said it could be time for the Reserve Bank to come up with a plan for how it would roll back the LVRs.

He said that while the LVRs were a matter for the Reserve Bank, it might be time to think about what economic conditions might allow for their removal.

Labour Party leader Jacinda Ardern also weighed in on the issue and said that Labour has never favoured the LVRs.

Their comments followed a call from REINZ chief executive Bindi Norwell to review the LVRs, especially for first home buyers.

“The LVR restrictions have done their job of slowing the market, but now it seems they are acting as a handbrake which is why REINZ is calling for LVRs to be reviewed for first time buyers.”

However, many economists have gone public with their view that the LVRs are unlikely to be lifted anytime soon.

Westpac economists said the case for loosening the LVR limits is not compelling at this time and their eventual roll back is likely to be gradual and preceded by consultation.

ANZ economists agreed the LVR restrictions will be removed in time, but said it won’t be for a while and then it is likely to be in stages in the first instance.

BNZ chief economist Tony Alexander said there was minimal chance of the Reserve Bank easing the LVRs in the near future.

Tags: Graeme Wheeler interest rates LVR Macro Prudential Tools RBNZ Reserve Bank

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

Last updated: 10 July 2020 9:02am

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