The Reserve Bank today said that high loan-to-value ratio (high-LVR) residential mortgage lending had fallen to 5.6 percent for the six months to the end of March 2014.
Deputy Governor Grant Spencer said: “Our initial assessment is that restrictions on high LVR lending helped reduce house price inflation. A more in-depth assessment of the policy and its impact on the housing market will be included in next month’s Financial Stability Report.”
All banks have complied with rules that restrict high-LVR residential mortgage lending to no more than 10 percent of total new mortgage lending. In September 2013, before the introduction of the new rules, high-LVR lending was approximately 25 percent of all mortgage lending.
The restriction came into force on 1 October last year and 31 March 2014 was the end of the first six month period over which all registered banks had to comply. Future compliance with the high-LVR lending rules will be measured against a 3-month rolling average for banks with more than $100 million per month of mortgage lending (ANZ, ASB, BNZ, Kiwibank and Westpac) and a 6-month rolling average for banks with less than $100 million per month of mortgage lending.
High-LVR loans are those that are made to someone borrowing more than 80 percent of the value of the property that is mortgaged.