The Reserve Bank of New Zealand (RBNZ) has confirmed it will proceed with easing mortgage loan-to-value ratio (LVR) restrictions from 1st December, following consultation with banks on the required changes to their Conditions of Registration.
The move finalises plans first announced on 14th October.
The RBNZ said the introduction of debt-to-income (DTI) restrictions last year meant LVR settings could now be “less restrictive on average”, including looser default settings that are expected to apply most of the time unless housing risks become particularly elevated.
With consultation now complete, the central bank has confirmed the LVR changes will go ahead as planned.
From 1st December, for owner-occupiers the limit on the share of new lending with an LVR above 80% will rise to 25%, up from 20%.
For investors, the limit on the share of new lending with an LVR above 70% will increase to 10%, up from 5%.
The RBNZ said it will continue to closely monitor housing-related risks and the impact of the revised settings.
The new Financial Policy Committee will review LVR settings at least annually and can tighten them again if risks become elevated.