* RBNZ proposes to tighten high LVR lending to
* RBNZ to consult on DTI restrictions and/or interest rate
* Plans to introduce changes from October
Aug 3 (Reuters) - New Zealand's Central Bank said on Tuesday
it plans to tighten mortgage lending further, as measures
introduced earlier this year to control an inflated housing
market and limit risky borrowing have had little impact.
Investors have continued to buy properties, buoyed by
historically low interest rates and cheap access to capital from
the government's pandemic-inspired stimulus spending.
The Reserve Bank of New Zealand (RBNZ) said on Tuesday that
it plans to tighten mortgage lending further by lowering high
loan-to-value ratio (LVR) lending and implementing
debt-to-income (DTI) restrictions or interest rate floors. It
aims to introduce the measures in October.
LVR is a measure of how much a bank lends against mortgaged
property, compared with the value of that property. Borrowers
with LVRs of more than 80% are often considered as stretching
their financial resources.
The bank had lifted LVR restrictions on mortgage lending in
April last year to spur credit and boost the pandemic-hit
economy, but reinstated the curbs in March after the housing
market accelerated rapidly.
"We are particularly concerned about those who have borrowed
in the past 12 months at high LVRs and high DTIs," RBNZ Deputy
Governor Geoff Bascand said in a statement.
"We've already made adjustments to LVR restrictions to
partially manage this risk, but we haven't seen a sufficient
reduction in risky lending," he said.
RBNZ said it proposes to restrict the amount banks can lend
above an LVR of 80% to 10% of all new loans, down from 20%
"There is no silver bullet to housing affordability and
monetary and fiscal policy need to work together to achieve a
sustainable housing market, Finance Minister Grant Robertson
said in welcoming RBNZ's plans.
House prices in New Zealand have risen the most among OECD
nations, posing the biggest challenge to Prime Minister Jacinda
The property boom has continued despite the government
slapping taxes on property investors.
The government also asked RBNZ earlier this year to have
regard for its housing policy while deciding on monetary policy.
New Zealand's Human Rights Commission launched an inquiry on
the housing crisis this week, calling it a human rights crisis.
(Reporting by Shashwat Awasthi; Editing by Devika Syamnath and