The Reserve Bank of New Zealand (RBNZ) said Friday it is keeping its mortgage deposit and lending restrictions unchanged after its annual review, arguing that housing risks are “currently contained” as prices stay broadly flat.
Under the loan-to-value ratio (LVR) “speed limits” left in place, banks may allocate up to 25% of new owner-occupier lending to borrowers with a deposit under 20% (an LVR above 80%), and up to 10% of new investor lending to borrowers with a deposit under 30% (an LVR above 70%). The restrictions are designed to limit banks’ exposure if home prices fall, by capping how much high-LVR — smaller-deposit — lending they can carry.
The decision affects mortgage borrowers, including overseas buyers financing New Zealand property, who continue to face the existing deposit thresholds rather than any near-term easing.
References
Finimize – New Zealand’s Central Bank Sticks With Mortgage Deposit Rules / MarketScreener – New Zealand Central Bank Maintains Loan-to-Value Ratio Restrictions Amid Contained Housing Risks
