tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Thursday, August 13th, 9:41AM

News

rss
Latest Headlines

LVRs kept on hold

The Reserve Bank has kept its LVR speed limits on hold amid fears low interest rates "could lead to a resurgence in higher-risk lending".

Wednesday, November 27th 2019, 10:27AM

by The Landlord

It has made the call as part of its latest Financial Stability Report (FSR), which was released this morning.

Reserve Bank governor Adrian Orr says that LVR limits have been successful in reducing the more excessive household mortgage lending.

“The LVR rules have improved the resilience of banks to a deterioration in economic conditions.”

Yet fears of excessive high LVR lending have made the Reserve Bank decide against loosening rules from current levels.

Orr says financial system vulnerabilities remain "elevated" and international risks have increased and sounded caution about the low rate environment leading to increased debt and inflated asset prices.

That means low rates are necessary and have helped to cushion the New Zealand economy and borrowers from the effects of weaker global growth.

But, over the longer term, prolonged low interest rates could lead to some borrowers taking on too much debt and for asset prices to become overheated, Orr says.

“This could increase the vulnerability of the economy and borrowers to future economic downturns."

The upshot of this is that current LVR rules will remain in place for the medium term.

Up to 20% of loans to owner-occupiers can have deposits of less than 20%, and up to 5% of home loans to investors can have  a deposit of less than 30%.

CoreLogic senior property Economist Kelvin Davidson says that, given emerging signs of a pick-up in the housing market, making no change to the LVR rules certainly seems the most sensible decision.

While there will no doubt be some disgruntled, would-be home-owners/investors out there, it’s not as if housing currently needs a policy-driven boost, he says.

For Westpac chief economist Dominick Stephens, the Reserve Bank’s decision to keep the LVRs on hold was as they expected due to the recent strengthening of the housing market.

They believe the Reserve Bank intends to ease the LVRs over time, as it moves away from a reliance on ‘macroprudential’ polices in favour of ‘microprudential’ measures, like bank capital requirements, he says.

“However, based on our forecast of 7% house price growth over both 2020 and 2021, we think the next move on LVRs could be some time way.”

Tags: CoreLogic Dominick Stephens interest rates Lending LVR Macro Prudential Tools mortgages OCR property investment Reserve Bank Westpac

« LVR restrictions to stay put: WestpacPutting the RBNZ's new capital rules into perspective »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • It starts with governance
    “@Adviser1 this is part of the discussion we need to have as an industry. It is also part of the message we have with the...”
    1 day ago by JPHale
  • It starts with governance
    “Thanks Gavin, appreciate your comments. So by engaging a compliance consultant and having the necessary policies, procedures...”
    1 day ago by Adviser1
  • It starts with governance
    “Hi Adviser 1 -I don't think peer review will cut the mustard. There is more to it than someone having a look at you do and...”
    2 days ago by gavin austin adviser business compliance
  • It starts with governance
    “Who offers a governance solution for a one man adviser business or is adviser peer review the way to go? Cheers...”
    2 days ago by Adviser1
  • It starts with governance
    “Well said as usual Russell, you’re right governance is one of the things that has been missing from the discussion and...”
    2 days ago by JPHale
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
Lender Flt 1yr 2yr 3yr
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 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
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 ▼3.85 ▼3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 ▼2.93 ▼3.07 ▼3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.45 2.99 3.35
SBS Bank 4.54 ▼3.05 3.19 ▼3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - ▼2.55 2.69 ▼2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 ▼2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 ▼3.29
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 3.65 3.69 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.05 3.13 3.12

Last updated: 11 August 2020 8:24am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com