ANZ analysts note that in its May 2019 Financial Stability Report, the RBNZ kept loan-to-value ratio restrictions unchanged as we anticipated, following a slight easing in January.

Key Quotes

“The May 2019 Financial Stability Report provided few surprises, with loan-to-value ratio (LVR) restrictions left unchanged as the Bank assesses the effects of previous easing and mortgage rate falls.”

“The RBNZ noted that financial system risks remain elevated, but are largely unchanged from the November FSR. Ongoing effort is seen as needed to bolster system soundness and efficiency, a nod to their assessment that higher bank capital requirements are necessary.”

“While LVR settings were left unchanged today, the RBNZ noted that restrictions will be reviewed every six months.”

“We expect that the LVR policy will be eased again in November as housing market risks continue to decline and banks’ lending standards for new mortgages remain prudent. The focus from here will be on developments in house prices, credit growth, and credit lending standards.”

“The FSR again dedicated a box to financial stability risks from climate change, outlining a survey of banks and insurers regarding potential industry impacts.”


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