Higher rates give RBNZ scope to lift LVR rules
In a speech to the Credit Suisse Asian Investment Conference, he said the Reserve Bank had made it clear from the beginning that the restrictions were not meant to be permanent.
The current cycle of OCR tightening might have had to have been sharper without the rules, he said, but now it was under way, it could give the Reserve Bank scope to lift the restrictions.
Since October, banks have been able to lend no more than 10% of their new loans to borrowers with a deposit or equity smaller than 20%.
“To be clear, the monetary policy tightening cycle that is now under way is motivated by the need to ensure that CPI inflation remains in the vicinity of 2% over the medium term. The boost to financial system resilience provided by the LVR restrictions, as well as a decision to increase risk weights for high-LVR housing lending, has meant that monetary policy has not needed to consider a tightening for financial stability purposes," he said.
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