Below are some key takeaways from the Reserve Bank of New Zealand’s (RBNZ) recently published Financial Stability Report, as highlighted by Reuters.
- To ease loan-to-value ratio restrictions.
- Households remain exposed to financial shocks due to their large mortgage debt burden.
- Mortgage credit growth and house price inflation have eased to more sustainable rates.
- If banks’ lending standards are maintained we expect to further ease LVR restrictions over the next few years.
- The domestic banking system remains sound at present.
- Will reassess whether the banking system has sufficient capital to weather future extreme shocks.
- Preliminary view is that higher capital requirements are necessary.
- Up to 20 percent (increased from 15 percent) of new mortgage loans to owner occupiers can have deposits of less than 20 percent.
- Up to 5 percent of new mortgage loans to property investors can have deposits of less than 30 percent (lowered from 35 percent).
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