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: Monday, July 26th, 10:52PM

Mortgages

rss
Latest Headlines

What DTI limits might look like

The Reserve Bank has added debt-to-income limits to its regulatory toolkit, and a recent memo from the central bank reveals the potential settings for the new rules if they come into effect.

Wednesday, June 16th 2021, 4:06PM

The RBNZ has added DTIs to its policy armoury, though there are no firm plans to introduce DTI rules, with the issue set to go under consultation.

However, guidance shared between the RBNZ and finance ministry last month reveals the potential level for DTI settings.

In its May correspondence with the Government, the central bank said: "Our analysis suggests that in the current market a DTI cap of seven would have minimal impacts on first-home buyers while deterring some purchases by investors."

The RBNZ warned a cap as low as six could hit first home buyers.

"A lower DTI cap of six would be expected to have more impact on moderating house prices and dampening investor demand, but would also have higher allocative efficiency costs and could prevent a small number of first-home buyers from entering the market."

The Reserve Bank also raised the possibility of differentiating caps by borrower group, and hinted that LVR-style speed limits could be used to allow flexibility for first home buyers.

"For example, the DTI cap could be set at seven for owner-occupiers and six for investors. DTI caps could also be combined with a speed limit (which could be differentiated by borrower group), allowing banks to allocate credit to those they judge as better high-DTI borrowers. These detailed design questions would need to be considered further and consulted on if we were to proceed with implementing DTI limits."

The central bank said it would take approximately six months to design and implement DTIs, if they were needed.

However, the Government's housing reforms and successful reintroduction of LVR rules could lessen the need for the additional policy tool. 

"The initial effects of the recent tightening of LVR settings and the Government’s recently announced housing policy changes will become clearer over the coming months. If we consider that further action is required we will determine the appropriate response based on the tools available to us at that time."

 

Tags: DTIs Lending RBNZ Reserve Bank

« Debt-to-income limits move closerAdviser concern over DTI threat »

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
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 2.95 3.29
ANZ 4.44 3.10 3.50 3.84
ANZ Blueprint to Build 1.68 - - -
ANZ Special - 2.50 2.90 3.24
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.55 2.95 3.29
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.55 2.95 3.25
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 3.15 3.22 3.85
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 1.95 1.85 2.35 2.45
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 2.15 2.35 2.75
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 3.34 3.34 4.14
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 2.49 2.49 3.29
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 2.69 2.99 3.29
SBS Bank Special - 2.19 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - ▲2.29 - -
The Co-operative Bank - Owner Occ 4.40 ▲2.49 ▲2.89 ▲3.19
The Co-operative Bank - Standard 4.40 ▲2.99 ▲3.39 ▲3.69
TSB Bank 5.34 ▲3.30 ▲3.69 ▲4.04
TSB Special 4.54 ▲2.50 ▲2.89 ▲3.24
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 3.15 3.49 3.89
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.89 3.29
Median 4.54 2.68 2.99 3.29

Last updated: 19 July 2021 9:09am

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