NZ banks work to support new LVR initiatives
(19 May 2015 – New Zealand) The New Zealand Bankers’ Association (NZBA) has said banks will work to meet the new loan-to-value ratio (LVR) changes announced by the Reserve Bank of New Zealand (RBNZ) on 13 May.
NZBA chief executive Kirk Hope said while banks will work to meet new obligations but warned that demand side initiatives are only part of the solution.
“We look forward to seeing more detail on the proposal and working with the Reserve Bank to help ensure the policy changes can be put in place and meet their aims,” said Hope.
“It’s difficult to be too specific about exact implications at this stage, without having worked through the details. It is likely though that this will make borrowing tougher for residential property investors in the Auckland region.
“In particular we welcome the Reserve Bank’s decision to increase the existing speed limit for high LVR borrowing outside of Auckland from 10 to 15 percent.
“This is a positive move and recognises the very different housing market conditions outside of Auckland.
“It’s important to note though that macro-prudential measures such as those announced today are to ultimately going to be limited in their impact on the Auckland housing market.
“Credit growth is currently around 5 percent, which is not high in comparison to pre GFC credit growth of around 16 to 18 percent.
“The real issues driving housing affordability in Auckland are the lack of housing supply, and strong inward migration, not the availability of cheap credit,” Hope said.
“We support sensible measures that help address the supply problem, and it’s important to realise that demand side initiatives can only play a limited role in addressing the underlying drivers of the Auckland housing market.
“Our banks are very competitive and will continue to do all they can to meet the needs of all sectors of their customer base,” Hope said.
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