LVR easing sooner than expected

In November’s Monetary Policy Statement, Reserve Bank Acting Governor Grant Spencer had signalled the bank would be laying out its plans on unwinding the LVRs in the FSR.

But most economists are surprised by the bank’s announcement this morning that it plans to begin relaxing the restrictions from January 1 - which is much sooner than expected.

ASB chief economist Nick Tuffley says uncertainty around the election’s impact on market activity and over when government tax/housing policies will take effect meant they expected the Reserve Bank would wait a little longer.

The shifts are modest but are likely to contribute to a stabilising in 2018 of the mild price falls seen in Auckland and Christchurch, he says.