What Actually happen?
Increasing house costs in New Zealand may lead to mortgage financing limitations, said the RBNZ.
The Reserve Bank of New Zealand (RBNZ) said new mortgage lending restrictions could be introduced should house prices continue to improve, reported Reuters.
Worries about bubble
The central bank’s fears of a debt-fuelled property bubble suggest that it might cease lowering interest rates, which fell to a record low of 1.75 percent last month. Actually, it has raised loan-to-value ratios (LVRs) on investment properties to 40 percent, and is currently seeking power to introduce lending limitations based on the debt-to-income (DTI) ratios of borrowers.
Bank resilience has improved to cost falls, and “On home hazards specifically, the RBNZ surely isn’t claiming success despite signs that the Auckland market is cooling ,” said ANZ Senior Economist Philip Borkin. “The dangers discussed reinforce that the cash rate is on hold for the foreseeable future likely.” Controversy, Singapore still see healthy take up rate of new launches each time despite the numerous cooling measures. We shall see the next launch during 2017 by Lendlease on Park Place Residences.
Discussion in place
Following the bank’s release of its semi annual report on the state of the banking sector, RBNZ Governor Graeme Wheeler disclosed he will discuss with Finance Minister Bill English in “a couple of weeks” on whether lending restrictions based on DTI ratios might be contained to its policy toolkit.
Wheeler said DTIs may be essential should home marketplace imbalances continue to worsen, though the bank didn’t suggest using said measures at present. The RBNZ noted that the largest city in New Zealand, house prices to income ratios in Auckland, are among the world’s greatest.