The analysis team at TDS explains that the NZ’s semi-annual Financial Stability Review highlighted reduced risks in the financial system, although global uncertainty remains.
“Although house prices remain elevated, housing price growth has slowed in response to the tighter LVR restrictions. However, RBNZ is monitoring the significant share of housing loans made to high debt-to-income (DTI) ratios. In general, banks have tightened credit conditions and risks in housing market while seeking to reduce offshore funding reliance. Recovering dairy prices have helped dairy farms to return to profitability but banks still need to be vigilant. May ANZ business confidence improved to 14.9 (prior 11) while activity steadies around 38 (prior 37). Inflation expectations increased to 2.0% (prior 1.8%).”
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