RBNZ proposes new Macro-Prudential Policies

RBNZ proposes new Macro-Prudential Policies to cool the Housing Market

This morning the RBNZ released a paper on changes to Loan-to-Value (LVR) to cool the housing market.

The key points mentioned included:
Proposes changes to LVR.

40% deposit will be required from residential property investors across NZ -banks will still be able to offer up to 5% of lending at a lower LVR.
20% deposit will be required from owner-occupiers across NZ - banks will be able to offer up to 10% at a lower LVR

Loan exempt from existing LVR restriction will continue to be exempt (eg to construct new dwellings)

The above represents a significant tightening in credit availability for residential property investors, and a modest tightening for owner-occupiers outside Auckland, compared with the current policy

They aim to curb higher risk associated with investor lending
Proposed restrictions would take effect 1st September
New policy removes distinction between Auckland & rest of NZ
This is the link to the RBNZ news release:

http://www.rbnz.govt.nz/news/2016/07/reserve-bank-consults-on-new-nationwide-investor-lvr-restrictions

These proposed new restrictions will make it easier for the RBNZ to lower the Cash Rate at its next meeting on 11th August. This is likely to place further downwards pressure on the NZD.

The newly scheduled RBNZ economic update will be held on 21st July.

The NZDUSD is lower in response.

Current indicative levels are:

NZDUSD 0.7025 / 0.7050
NZDAUD 0.9315 / 0.9340
NZDEUR 0.6340 / 0.6365
NZDGBP 0.5305 / 0.5330
NZDJPY 74.30 / 74.55

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