Sharechat Logo

NZ dollar, interest rates falls after RBNZ details LVR restrictions

Tuesday 20th August 2013

Text too small?

The New Zealand dollar fell about half a US cent and interest rates dropped after Reserve Bank governor Graeme Wheeler detailed the bank's plans to curb high loan-to-value home lending, which could potentially slow the pace of hikes to the official cash rate.

The kiwi dollar fell as low as 79.76 US cents, and recently traded at 7992 cents, from 80.34 cents before the announcement. The trade-weighted index fell to 75.21 from 75.60. The two-year swap rate fell 5 basis points to 3.435.

The central bank will limit the amount of new lending banks can do on high LVR to 10 percent on Oct. 1, measured as an average over a six-month transition period, Wheeler said in a speech at Otago University in Dunedin.

Allowing for exemptions, that effectively means new home lending with deposits of less than a fifth of a property's value will amount to about 15 percent of new loans, half the volume of high LVR loans banks were making at the start of this year.

The introduction of the new limits will give the central bank "greater flexibility in considering the timing and magnitude of any future increases in the OCR" which is sitting at a record-low 2.5 percent, Wheeler said.

"The 10 percent speed limit on the high LVR lending was a little bit lower than people thought," David Croy, head of Global Markets Research at ANZ New Zealand. "It is a tighter macro-prudential policy, which means there is less pressure on monetary policy to do the work."

NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Pushpay buys Colorado rival for US$87.5m
Xero chair to retire early as family’s health comes first
Business leaders quiz finance minister on capacity to spend $12b
House prices are accelerating again, even in Auckland
13th December 2019 Morning Report
Tourists still coming but growth is slowing
Peters backs StuffME merger bid
Supplements, skincare firm poised for reverse listing
NZX, EEX eye carbon auction opportunity
A2 Milk boss steps down, shares fall 7.7%

IRG See IRG research reports