RBNZ’s mortgage caps continue to show success

Advertisement
ScreenHunter_01 Mar. 22 09.40

By Leith van Onselen

The Reserve Bank of New Zealand’s (RBNZ) speed limits on high loan-to-value ratio (LVR) mortgage lending appear to be showing more signs of success, with the latest housing loan approvals data from the RBNZ suggesting that mortgage demand is falling, as evident by year-on-year growth in the number of approvals (-8.6%) slowing to the lowest level since the week ended 25 March 2011:

ScreenHunter_615 Dec. 06 13.08

The most recent BNZ-REINZ Residential Survey showed that first home buyers had deserted the market, whereas the recently released RBNZ Financial Stability Report suggested that it was starting to see some early impacts from its LVR speed limits, although the curbs had yet to be reflected in New Zealand house prices.

Advertisement

Logically, the decline in mortgage approvals should next flow into lower house sales and weaker price growth.

[email protected]

www.twitter.com/leithvo

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.