RBNZ’s Spencer –

  • says banks are adjusting to new lending limits
  • Limits on LVR lending having an impact, but too early to assess the impact of the restrictions on house prices, credit growth

“The reduction in high-LVR lending will help to reduce the risks of a sharp correction in house prices in an already overvalued housing market. Such a correction could be damaging for the financial sector and broader economy,” – Spencer

NZD has fallen on the announcement

In brief – High-LVR limits took effect on 1 October and require banks to reduce lending at LVRs above 80 percent to no more than 10 percent of their total new mortgage lending