DTIs still in the melting pot

The RBNZ says DTIs will be complementary to its loan-to-value ratio (LVR) tool which has restricted lending to home buyers with a 20% deposit and investors with 40%. The major banks have some leeway in lending on lower deposits, but have kept them to a minimum.
Implementing DTIs does not require government approval, but in the past the RBNZ has sought approval from the Finance Minister before implementing new tools. Willis says the central bank is yet to speak to her about plans for the possible DTI restrictions. Until then, she is not commenting. However, National has favoured DTIs.

In a recent RBNZ article, it claims if the previous government had authorised it to introduce DTIs pre-Covid, fewer borrowers would be struggling now that interest rates are higher. 

If DTIs are applied, banks will be prepared as the RBNZ has already told them to be ready from April 2024.

In a New Zealand case study for the Bank of International Settlements, the Reserve Bank says DTIs are the most effective in supporting financial stability and sustainable house prices, while having a smaller impact on first-time buyers than on investors.