New Zealand Central Bank Keeps Home Lending Rules in Place Amid Housing Market Concerns

New Zealand's central bank has decided to keep current home lending rules in place. The Reserve Bank of New Zealand (RBNZ) reviewed mortgage loan-to-value ratio settings, considering house prices and financial stability risks. According to Assistant Governor Financial Stability Angus McGregor, the RBNZ aims to curb riskier lending and reduce exposure to housing market corrections.

The bank has maintained restrictions allowing banks to issue up to 25% of new owner-occupier loans with loan-to-value ratios above 80%, and up to 10% of new investor loans with LVRs above 70%. These rules require borrowers with smaller deposits to account for only a limited share of banks' mortgage books.

The RBNZ cited housing market conditions, financial stability risks, and the resilience of the banking system in its decision. Housing remains a drag on New Zealand's uneven economic recovery, with national house prices remaining broadly flat. The subdued market has weighed on residential construction, a major component of domestic activity.