RBNZ predicts turnover drop

Banks must keep their low-LVR lending to less than 10% of their new loans.

In an analytical note published today, the bank said it expected a drop in turnover and for house price inflation to drop by about four percentage points from where it otherwise would have been in the first year.

If the limits created a behavioural change among buyers and sellers, the impact could be more significant.

To achieve the same result through monetary policy alone, it would have to hike the official cash rate by more than 30 basis points, it said.