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LVR loosening under review: Bascand

Reserve Bank deputy governor Geoff Bascand says the central bank is assessing whether current LVR restrictions are appropriate, following a stabilisation in house prices and bank credit tightening.

Wednesday, November 14th 2018, 10:45AM

Geoff Bascand, RBNZ

The Reserve Bank's long-awaited Financial Stability Report is due on 28 November. Bascand said loosening would be under review but echoed comments from Reserve Bank officials, who said last week LVR easing would be weighed up against other risks in the housing market.

Under current restrictions set by the Reserve Bank, investors need a minimum 35% deposit, and owner-occupiers require at least 20% to buy an existing property. 

In a speech in Sydney, Bascand said the bank would address whether LVR levels were right for the current market: "Our risk tolerance for the recent housing and credit boom is implied by our calibration of the loan-to-value restrictions. We keep these settings under review and will publish our next assessment of them in the upcoming FSR."

He added RBNZ noted a stabilising market, in part driven by banks' credit tightening. Bascand hinted the central bank was reviewing whether or not to loosen LVR, as risks reduced in the banking system. 

He said: "The question we are assessing is whether the same restrictions are needed in the current environment where debt levels remain high but are not deteriorating, now that bank lending standards have tightened significantly and rapid growth in credit and house prices have stabilised. If these conditions continue, we expect to gradually ease the policy in coming years."

In his speech, titled 'Financial Stability -- risky, safe, or just right?' Bascand described New Zealand's biggest financial risks. “New Zealand has two main vulnerabilities: our high levels of indebtedness (in the household and dairy sectors) and our reliance on foreign sources of funding. We will publish our next assessment of those risks in the Financial Stability Report on 28 November.”

He said RBNZ's financial stability measures had worked, with the financial sector "sound and well regulated". “Ten years on from the pain and enormous costs of the Global Financial Crisis (GFC), it’s clear that prevention is better than cure," he added.

 

 
 

 

 

Tags: Andrew Bascand RBNZ Reserve Bank

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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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