Comments in an RBNZ report on financial stability
- There is evidence of a speculative dynamic emerging with many buyers becoming highly leveraged
- Now concerend about the risk a sharp correction in the housing market would pose for financial stability
- LVR restrictions do not apply to new residential construction
- Putting in place more stringent LVR restrictions to reduce risks to financial stability caused by high-risk mortgage lending
- Further tightening of investors’ restrictions taking effect on May 1
- As of March 1 RBNZ will be reinstating LVR restrictions at the same level the y were set at prior to the onset of covid-19
The kiwi isn’t moving on this but the takeaway is that the RBNZ will use targeted policies rather than rates to control housing. That’s the playbook anyway but when you see it in action, you have to wonder if only housing prices are rising on ultra-low rates.
This article was originally published by Forexlive.com. Read the original article here.