RBNZ’s mortgage caps continue to show success

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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:

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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.

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

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Leith van Onselen


  1. The NZ market has become desensitised to the LVR changes at these levels. “Was that it ?!” seems to be the chortle from die hard investors, just like the lunchtime earthquake just south of Welly today that failed to affect the kiwi. Sure it was only a 4.7. But at 4.7, who knew it would stop there and not turn into the 6.5 we had a few months back that sent the NZ$ down 2 cents in the blink of an eye. It’s going to take more than tinkering with the LVR’s now to shift this market to anywhere that’s good….

      • If the alternative is ‘do nothing’, then yes. But there are many other alternatives as we all know – from Land Tax to scrapping negative gearing and a multitude of things in between – all out of the RBNZds hands. NZ was alive with “100 ways to get around the new rules” before they even ( eventually!) arrived. See your graph above? The biggest impact was ramming the OCR up to 8.25% 5 odd years ago. Then the retracement when that policy was retracted. We have an election next year. What chances that this LVR policy survives into that? Little….and those who want it gone…know it.

      • flyingfoxMEMBER

        @Janet Good points but only the gov can implement a land tax and remove neg gearing. Not the RBNZ. So lets give them credit for doing what they can.

      • The reality is the RBNZs LVR restrictions are biting, as Leith’s article above clearly illustrates.

        Note too … what John Bolton, Mortgage Broker said in an Interest Co NZ interview with Gareth Vaughan today …


        John is a “down to earth” guy, who tells it like it is.

        Note within the comments thread to the above the political activity underway in New Zealand as well on supply issues. It needs to be read closely.

        The information / feedback I’m getting constantly now, is that the party is over for the speculators / land bankers here in New Zealand. About b……y time.

        Hugh Pavletich

  2. Success, no more FTB, investors rejoice to be able to buy more reasonably without being outbid by silly FTB fearing of missing out.Sure I would be great if the RBA could implement it.Successes like this one need to be encouraged.

      • It s not trolling I am only using a tong in cheek from the post title to remind renters here who are calling for the policy to be implemented in Aus, who the real beneficiaries of this so successful MP are and who are excluded from the feast.

  3. Success for ” investors” perhaps dam. For the fairness to your children and grandchildren? ..who hopefully want to try and make their own way in the world without your rental handmedowns. You epitomise pure greed with your every word. Troll on.