RBNZ to ease LVR restrictions

The Reserve Bank intends to ease mortgage loan-to-value ratio (LVR) restrictions from December 1.

Tuesday, October 14th 2025, 4:04PM

“Over the past year, we have reviewed our approach to setting LVR restrictions,” acting assistant governor financial stability, Angus McGregor says.

“We concluded that the introduction of debt-to-income (DTI) restrictions last year means LVR settings can be less restrictive on average. This includes looser default settings that we expect will be in place most of the time, except for when risks are particularly elevated,” McGregor said.

DTI restrictions help to underpin borrower resilience by acting as a guardrail for risky lending. They can help contain the severity and consequences of housing market corrections.

“Easier LVR settings will give banks more flexibility to lend, improving market efficiency and access to credit, particularly for first home buyers.

Now is an appropriate time to move to the new default settings. House prices are within our range of sustainable estimates. Growth in mortgage lending remains moderate and the share of high-risk lending is low,” McGregor says.

For owner occupiers, the limit on the share of new lending allowed with an LVR above 80% will increase to 25% (up from 20%).

For investors, the limit on the share of new lending allowed with an LVR above 70% will increase to 10% (up from 5%).
RBNZ will consult with banks on changes to their Conditions of Registration over the next two weeks.

“We have also reviewed our DTI restrictions and decided to keep settings unchanged. They remain calibrated to limit high-risk lending in housing upswings and periods of low interest rates, without the need for adjustment,” McGregor says.

Responsibility for reviewing LVR and DTI settings will sit with the new Financial Policy Committee from next year. The Committee will review settings at least annually and can adjust if risks become elevated.

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