RBNZ’s mortgage caps continue to bite

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By Leith van Onselen

Last week’s release of the bi-annual Financial Stability Report by the Reserve Bank of New Zealand (RBNZ) suggested that it was starting to see some early impacts from its speed limits on high loan-to-value ratio (LVR) mortgage lending, implemented on 1 October 2013, although the curbs had yet to flow through to New Zealand house prices:

Mr Wheeler said that the Bank is closely watching the impact of the LVR policy. “The early evidence shows that banks have significantly reduced high LVR lending approvals, while increasing the cost of high LVR loans. However, it is too early to assess the impact of the measures on house price inflation”…

Latest weekly housing loan approvals data from the RBNZ suggests that mortgage demand continues to fall, with year-on-year growth in the number of approvals (-5.8%) slowing to the lowest level since the week ended 1 April 2011:

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House sales and house prices are the next indicators to watch.

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Leith van Onselen


  1. No, Leith. What New Zealand needs, according to one consideration the RBNZ is looking at, is to tax work effort more, and give tax breaks to investment income. “…the central bank advocated consideration of the Nordic tax system, where tax on savings and investment is lower than on labour…” (NB: ” the Reserve Bank estimated New Zealand’s household saving rate was negative 1 percent of disposable income in the 2013 March, and this month said gains in private savings were under threat by increased appetite for credit.)