Activating DTIs and loosening LVRs
In a submission to the Reserve Bank on its DTI proposals, the association says there may be some impact to owner-occupier borrowers under the proposal of a DTI of six with a speed limit of 20%.
It says a higher limit at a minimum of 25% should be set for this borrower group to allow for additional bank conservatism.
The NZBA, which has 18 registered bank members, now supports DTIs after previously opposing them, saying in 2022 that there would be “a real risk of adverse customer impact” if they were introduced.
However, the association says the loan-to-value ratios need to be loosened for investors as well. It argues there may also be some impact to investor flow at the proposal of a DTI of 7 with a speed limit of 20% due to complex lending scenarios
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