Rules may be relaxed on Friday: Economists
The Reserve Bank may relax its loan-to-value rules as soon as this week, Westpac’s economists suggest.
Wednesday, May 7th 2014, 3:37PM
The bank’s deputy governor, Grant Spencer, is to make a speech on housing on Friday morning.
Westpac’s economists say he may use that speech to relax the rules that limit the amount of lending banks can do to borrowers with a deposit of less than 20%.
More detail could then be provided in the Financial Stability Report, due next week.
Since October, banks have had to keep their new high-LVR lending to no more than 10% of new loans.
But they’ve been operating at about half that. Data released last week showed lending to borrowers with less than 20% equity fell to just 4.8% of new loans in March.
The Reserve Bank has been surprised by the extent to which lenders have pulled back from loans for low-deposit borrowers.
It had expected that, including loans that are exempt from the rules, low-deposit lending would slow to about 15% of the market.
Westpac’s economists said they expected some action from the bank soon to loosen but not completely remove the limits: “Given both the topic and timing of this speech, and the RBNZ’s recent tendency to use speeches for policy announcements, we think Friday’s speech could provide an opportunity for the RBNZ to recalibrate the speed limit on high LVR lending.”
| « Switch to fix puts pressure on: Westpac | Parents 'propping up lending' » |
Special Offers
Comments from our readers
No comments yet
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
