RBNZ Maintains Mortgage Lending Restrictions Amid Stable Housing Market

The Reserve Bank of New Zealand (RBNZ) has decided to keep its current mortgage lending restrictions in place after reviewing macroprudential policy. The Financial Policy Committee considered factors such as house price movements, financial strain among borrowers, and the resilience of the banking system before making the decision.

Under the existing rules, banks can have up to 25% of new owner-occupier lending at loan-to-value ratios above 80%, while for investors, up to 10% of new lending can have loan-to-value ratios above 70%. The restrictions aim to limit higher-risk lending and reduce banks' exposure to a sharp correction in house prices.

RBNZ Assistant Governor for Financial Stability Angus McGregor noted that the rules are reviewed annually to ensure they remain suitable for housing market conditions and financial stability risks. While the decision means borrowers with smaller deposits will continue to face limits on higher loan-to-value categories, it also suggests that the central bank does not currently see enough change in housing or banking risks to warrant tightening or easing restrictions.