Regulatory Alerts2022-05-17
Regulatory Impact Assessment on Capital Requirements for Reverse Mortgage Loans
The Reserve Bank of New Zealand issued this assessment to implement specific capital requirements for reverse mortgage loans, aligning regulatory treatment with their distinct risk profiles. The central bank selected a preferred option to prescribe direct risk weights for these loans, mirroring approaches used by Australian and Canadian regulators to ensure consistency and reduce complexity. This decision includes adjustments such as introducing intermediate loan-to-value buckets and mandating property revaluations every three years to better capture long-term risks.
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