LVR speculation rife ahead of FSR

ANZ's newly announced chief economist, Sharon Zoller, says the Reserve Bank is likely to describe New Zealand’s financial system as sound, but with risks remaining, in the FSR.

Those risks have long included housing market vulnerabilities, but the housing market has cooled significantly over recent months and that means the Reserve Bank may well feel the risk has reduced, she says.

In turn, this means that any commentary on the potential removal of the current LVR restrictions will be jumped on.

Zoller says the Reserve Bank has always said the restrictions, which have led to a reduction of investors in the market and in higher-risk lending, were not meant to be permanent.