Low equity lending running at half speed
The Reserve Bank said that high loan-to-value ratio (high-LVR) residential mortgage lending had fallen to 5.6% for the six months to the end of March 2014, which is little more than half what is allowed under its "speed bump" restrictions.
“Our initial assessment is that restrictions on high LVR lending helped reduce house price inflation," deputy governor Grant Spencer said. A more in-depth assessment of the policy and its impact on the housing market will be included in next month’s Financial Stability Report.
All banks have complied with rules that restrict high-LVR residential mortgage lending to no more than 10% of total new mortgage lending. In September 2013, before the introduction of the new rules, high-LVR lending was approximately 25% of all mortgage lending.
The restriction came into force on October 1 and March 31 was the end of the first six month period over which all registered banks had to comply. Future compliance with the high-LVR lending rules will be measured against a 3-month rolling average for banks with more than $100 million per month of mortgage lending (ANZ, ASB, BNZ, Kiwibank and Westpac) and a 6-month rolling average for banks with less than $100 million per month of mortgage lending.
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