Reserve Bank cools on interest-only limits

While the Reserve Bank has taken its first steps towards implementing debt-to-income limits, it has played down the chances of introducing interest-only lending limits.

Wednesday, June 16th 2021, 10:34AM

The central bank today confirmed that DTIs are set to be added to its regulatory toolkit, as it seeks to keep a lid on the runaway housing market.

But while unpopular DTIs are set to come into effect over the next six months, interest-only lending limits appear to be off the table for now.

In a technical summary note published today, the RBNZ said it had assessed the effectiveness of interest-only lending limits, "and determined that currently, interest-only lending to investors (or other borrowers) does not pose financial stability risks, nor do they impact negatively on the Government’s housing objectives. We also found that restricting interest-only lending would be challenging to implement and enforce."

The comments appear to take interest-only curbs off the agenda for now, though investors are reeling from the potential introduction of DTIs, following a year of heavy regulation. 

Tags: DTIs interest-only mortgages Lending RBNZ Reserve Bank

« Debt-to-income limits move closerWhat DTI limits might look like »

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