RBNZ could impose DTIs on mortgage lending from July

RBNZ said it is currently reviewing submissions from its latest round of consultation and will announce its decision on DTI and loan-to-valuation-ratio (LVR) restrictions “around the middle of the year.”

Initially, RBNZ expects DTI restrictions are unlikely to affect most borrowers and that their introduction could allow the regulator to reduce LVRs.

“By activating DTI restrictions when the market is relatively subdued, it is likely that they will not be binding initially for most borrowers,” it said.

“Instead, DTI restrictions are intended to protect against increases in risky lending, especially when interest rates decline.”