Regulatory Alerts2022-05-17
Summary of Submissions on Proposed Removal of Loan-to-Value Ratio Restrictions
The Reserve Bank of New Zealand issued a summary of submissions regarding its April 2020 proposal to temporarily remove Loan-to-Value Ratio restrictions to support the economy during the COVID-19 crisis. Submissions revealed a divide between locally incorporated banks and first-home buyers favoring the change for market stability, and opponents concerned about financial stability, increased household indebtedness, and housing inequality. The Reserve Bank concluded that banks are likely to tighten lending standards rather than loosen them, rendering LVR restrictions unnecessary for financial stability in the current economic context.
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