Will RBNZ go back to toolbox?
The loan-to-value restrictions introduced at the end of last year were designed to shore up financial stability and reduce the risk to banks from the threat of a house price collapse.
They prompted a large drop in turnover but over recent months there have been indications that the market, particular in Auckland, is picking up again.
While there had been speculation that the LVR limits could be lifted at the end of this year, there have now been suggestions that more tools may need to be deployed.
As well as the loan-to-value restrictions, the Reserve Bank has access to other macroprudential tools: Adjustments to the core funding ratio, a countercyclical capital buffer and adjustments to sectoral capital requirements.
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