Reserve Bank of New Zealand maintains mortgage LVR rules

The Reserve Bank of New Zealand (RBNZ) has decided to maintain its current loan-to-value ratio (LVR) settings following its annual review of macroprudential policy. Assistant Governor for Financial Stability Angus McGregor stated that the decision follows an assessment of housing market conditions, the resilience of the banking system, and financial strain among borrowers.

The existing restrictions, which have been in place since December, allow banks to issue up to 25 per cent of new owner-occupier loans with LVRs above 80 per cent, and up to 10 per cent of new investor loans with LVRs above 70 per cent. Debt-to-income (DTI) restrictions also remain in effect to prevent high-risk lending buildup.

McGregor noted that housing risks are currently contained, as national house prices have remained broadly flat and mortgage lending growth has been modest. Meanwhile, the New Zealand dollar has faced ongoing weakness, with economist Tony Alexander noting that the currency has struggled to gain value despite strong commodity prices and healthy terms of trade, potentially due to international factors such as US tariffs and geopolitical tensions.