Regulatory Alerts2022-05-17
Reserve Bank of New Zealand Framework for Restrictions on High-LVR Residential Mortgage Lending
The Reserve Bank of New Zealand proposes a framework to impose quantitative restrictions on the share of high loan-to-valuation ratio residential mortgage lending by registered banks to maintain financial stability. The policy requires banks to adhere to standard conditions of registration that limit high-LVR lending percentages over rolling periods and prohibits anti-avoidance practices such as using unsecured funding for deposits. Specific exemptions apply to certain refinancing, portability, and Housing New Zealand schemes, while the Reserve Bank retains the authority to vary or remove these conditions based on systemic risk assessments.
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