Rising home loan rates a fait accompli
Of all the issues and risks the Reserve Bank dutifully discussed in its Financial Stability Report (FSR) it was the local housing market, and China, that seemed to bubble to the surface.
But before delving into this, one shouldn’t overlook the Reserve Bank’s opening remark that “The New Zealand financial system remains sound, and well placed to support expansion in the economy.”
Indeed, that “By a range of measures, the financial system is now stronger than at any time during the last major economic and credit cycle of 1999-2007.” The buffers not only remain but have improved, FSR by FSR, over recent years.
Still, the Reserve Bank is keeping a close eye on a number of risks (as it should). Chief amongst these would appear to be the local housing market and the debt that is sheeted against it. Rightly or wrongly, discussion on this – both within the FSR and during the press conference that came with it – gravitated (degenerated?) to the loan-to-value ratio (LVR) restrictions.
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