The IMF has just come out and backed the Reserve Bank of New Zealand’s macroprudential policies. From Interest.co.nz:
The Reserve Bank’s Loan to Valuation (LVR) mortgage lending limits appear to have put a cap on house price growth but haven’t reduced the risks borrowers face from rising mortgage interest rates, according to the International Monetary Fund (IMF).
The IMF’s Global Housing Watch report for the second quarter of this year, says this country’s LVR restrictions “appear to have had some moderating influence on mortgage lending, expected and actual house price growth, and the quality of loan composition.”
The report says the LVR restrictions have also helped to contain household debt levels.
However it also notes that even with the LVR restrictions in place, borrowers still face significant risks from rising interest rates or from an economic shock which could reduce household incomes…
APRA/RBA should take note.
