Reserve Bank tightens LVR rules for investors

The central bank has announced a new "60/5" speed limit for investor lending, which will come into effect from May this year. 

Under the rule, banks will only be allowed to lend 5% of their book to investors above 60% LVR.

In effect, it means most investors will struggle to borrow unless they can provide a 40% deposit.

RBNZ deputy governor Geoff Bascand said: "We are now concerned about the risk a sharp correction in the housing market poses for financial stability. There is evidence of a speculative dynamic emerging with many buyers becoming highly leveraged.