A gut feeling that banks may not have learned their lesson around prudent lending is holding Reserve Bank governor Adrian Orr back from easing loan to value restrictions, Lynn Grieveson reports.
The Acting Governor of the Reserve Bank, Grant Spencer, has warned households to prepare themselves for higher interest rates in the future.
Reserve Bank Governor Grant Spencer was at pains yesterday to portray his slight relaxation of Loan to Value Ratio restrictions as no 'green light' for home buyers and bankers to jump back into a market about to boom again.
The Reserve Bank has announced it will slightly relax its Loan to Value Restrictions (LVRs) on owner occupiers and rental property investors from January 1 because of a moderation in house price inflation.
The Reserve Bank is widely expected to signal a relaxation of its unloved Loan to Value Ratio restrictions on home buyers. Politicians and first home buyers hope any relaxation will help them buy a house sooner, but they should be careful what they wish for, writes Bernard Hickey.
Finance Minister Grant Robertson is hopeful the Reserve Bank will ease restrictions on Loan To Value Ratios for first home buyers, in part because other measures being taken by the Government to take pressure off house prices could give the regulator room to breathe easier.
Australia's bank regulator has just launched a crackdown on interest-only lending, raising questions about whether the Reserve Bank of New Zealand could do the same here. Any similar limit on this side of the Tasman would significantly restrict lending to landlords in particular, but economists don't think New Zealand's regulator is looking at using the tool -- for now.
The debate over just how big the housing shortage in Auckland actually is and how much building is going on there flared again yesterday, both inside and outside Parliament.
Auckland property developers report banks pulling back from lending for new apartments and sections in recent weeks, potentially frustrating the Government's hopes for a 50% increase in privately-funded residential construction there over the next 18 months.
For the convenience of email subscribers, here's my weekend column on whether the rush to longer term fixed rate mortgages seen from 2003 to 2007 could be repeated now that fixed rates are much cheaper than floating.