Early Tuesday morning in Asia, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr proposed tighter lending standards to control the house prices in the Pacific nation.
The write-up, published on the RBNZ site, said, “House prices are above their sustainable level and the Reserve Bank of New Zealand – Te Pūtea Matua – is now considering tighter lending standards to reduce the risks associated with excessive mortgage borrowing.”
Following the announcement, Beehive conveyed that New Zealand Finance Minister Grant Robertson and Reserve Bank Governor Adrian Orr have updated the Memorandum of Understanding (MoU) on macro-prudential policy to further protect the financial system and support the Government’s housing objectives.
Beehive said, “It has proposed reducing the amount of lending banks can do above a high Loan-to-Value Ratio (LVR) of 80 percent, from 20 percent to 10 percent of all new loans. Consultation will start with banks later this month, with a view to introduce this from 1 October, 2021.”
Other than the RBNZ moves, news that New Zealand (NZ) Prime Minister Jacinda Ardern’s cold and taking a covid test should have also weighed on the NZD/USD prices, but did not. It was known that Deputy Prime minister Grant Robertson will lead the nation in PM Ardern’s absence.
Market reaction
NZD/USD stays mildly bid around 0.6980, up 0.11% by the press time, following the news.
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