RBNZ helping banks to try and keep lending to customers
- LVR removal doesn't weaken financial system resilience
- Unlikely that banks will weaken standards on risky lending
This has been proposed some time last week but they seem to have reached a decision rather quickly. The LVR restrictions by the RBNZ stipulate that:
- Banks are permitted to make no more than 20 percent of their residential mortgage lending to high-LVR (less than 20 percent deposit) borrowers who are owner occupiers
- Banks are permitted to make no more than 5 percent of residential mortgage lending to high-LVR (less than 30 percent deposit) borrowers who are investors
Hence, the removal of these restrictions during the next year is largely to help the flow of credit and to support lending from banks to consumers amid the virus fallout.
