Regulatory Alerts2022-05-17
Regulatory Impact Assessment – Removal of Loan-to-Value Restrictions following the onset of COVID-19
The Reserve Bank of New Zealand issued this assessment to justify the temporary removal of Loan-to-Value Ratio restrictions for one year to support financial stability during the COVID-19 pandemic. The policy change aims to prevent banks from perceiving LVR limits as an impediment to providing mortgage deferrals and to ensure continued access to credit for credit-worthy borrowers. While acknowledging risks such as increased household debt, the Reserve Bank determined that the current economic conditions reduce the need for such restrictions and that existing prudential frameworks will mitigate potential negative impacts.
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