Reserve Bank gets serious about 'risky lending'
The Reserve Bank's deputy governor and general manager for financial stability Geoff Bascand says consultation on its proposal to restrict the amount of lending banks can do above an LVR of 80% to 10% of all new loans will begin later this month with a view to introducing it from October 1.
The action follows the signing of an updated Memorandum of Understanding (MoU) on macro-prudential policy with the Minister of Finance.
“The updated MoU adds debt serviceability restrictions to the list of tools available which will enable us to be more targeted in our approach to tackling financial stability risks,” Bascand says.
“We are focussed on ensuring borrowers are resilient to a range of future economic and financial conditions. We are particularly concerned about those who have borrowed in the past 12 months at high LVRs and high DTIs."
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