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Acting RBNZ Governor reignites DTI ratio debate

Outgoing Grant Spencer calls debt servicing ratios “natural complement” to existing system

Wednesday, March 14th 2018, 8:08AM

by Dan Dunkley

The Acting Governor of the Reserve Bank has repeated calls for a debt-to-income (DTI) instrument to be added to the central bank’s macro prudential tool kit, as part of a looming review into RBNZ lending policy.


Grant Spencer said debt servicing ratios were a “natural complement” to the Reserve Bank’s existing toolkit , “focused on reducing the risk of borrower default”. Spencer, who makes way for Adrian Orr this month, made the comments in a speech to the Institute of Finance Professionals NZ in Auckland on Tuesday. Spencer said the central bank's LVR policies had helped the country achieve "economic and financial stability" since the GFC.


Over the past year the Reserve Bank has argued for the introduction of debt-to-income tools in order to control lending in the New Zealand housing market. The bank launched a consultation on the topic last year but faced criticism from lenders.


Spencer’s comments are likely to raise concerns among lenders and brokers, who have lamented a lack of liquidity in the market caused by existing LVR restrictions.  ANZ has labelled DTI calculations “fundamentally flawed”, while BNZ described DTIs as a “relatively crude measure” of loan servicing capacity. Former Prime Minister Bill English was also opposed to DTIs.


Spencer said RBNZ’s recent DTI consultation had been “overtaken by the general election”, but would form a key point of discussion during the Reserve Bank’s Macro-Prudential Review. He encouraged RBNZ and the Treasury to consider the move: “Many macro-prudential authorities overseas view some form of debt servicing ratio as a key anchor and safeguard for macro-financial stability. The review should give serious consideration to adding such an instrument to the toolkit.”

Tags: DTIs property investment RBNZ

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Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

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