RBNZ confirms macroprudential tools
It has reported back on the results of its public consultation on proposed macroprudential tools and confirmed it is adding loan-to-value restrictions, a countercyclical capital buffer, and adjustments to the core funding ratio and sector capital requirements to its toolkit to counteract asset price bubbles and financial system instability.
It said the tools would be deployed only when necessary and it was hoped that sometimes simply a warning from the Bank that it was considering using the tools would be enough to curb problem credit growth.
Three submitters told the Bank that constraining the share of high-LVR lending banks were allowed would be more appropriate than restricting low-equity lending in general.
The Bank said it agreed that this was an appropriate way to allow banks to continue to lend to credit-worthy borrowers. “If we were to implement LVR restrictions, we would favour this approach in the first instance.”
But it said it would not discount blanket LVR caps.
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