Analysts at ANZ explained that in its May 2018 Financial Stability Report the RBNZ noted that financial stability risks have not changed materially over the past six months.
Key Quotes:
“The financial system is sound, but the culture and conduct of banks is in the spotlight – with findings from ongoing investigations to come. Risks related to the housing market have lessened, but house prices and debt remain high.”
“High dairy debt and bank reliance on offshore funding also remain vulnerabilities. Loan-to-value ratio restrictions are unchanged and will only be eased once the RBNZ has sufficient confidence that risks have declined.”
“Given high house prices and household debt, we think the RBNZ should tread carefully in easing restrictions further. Risks are likely to recede only slowly, short of a fundamental change in market conditions.”
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