Extending LVR limits to non-banks "nanny state" idea

The central bank is reviewing whether all lenders -- not just banks -- should be subject to LVR restrictions, as part of phase two of the review of the Reserve Bank Act.

The review is one part of a wide-ranging consultation. The Reserve Bank says current LVR restrictions "could be undermined" if non-banks "are willing to offer the loans that the Reserve Bank has restricted". 

Terry Butler, acting chief executive of peer-to-peer lender Southern Cross Financial, fears an LVR extension to all lenders could impact availability of finance, and investment opportunities for P2P investors.

Butler said a widening of LVR was symptomatic of a "nanny-state philosophy".