Regulatory Alerts2022-05-17
Summary of Submissions: Reinstating Loan-to-Value Ratio Restrictions
The Reserve Bank of New Zealand has decided to reinstate Loan-to-Value Ratio restrictions effective 1 March 2021, with further tightening for investors taking effect on 1 May 2021, to mitigate financial stability risks from a rapidly accelerating housing market. The new limits cap high-LVR lending at 20 percent for owner-occupiers and 5 percent for investors, with the investor threshold dropping from 70 percent to 60 percent in May. This decision follows a consultation process that received 23 submissions, all supporting the reinstatement, though many urged stricter investor caps or exemptions for first home buyers.
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