RBNZ Financial Stability Report

RBNZ Financial Stability Report

The RBNZ has just released its Financial Stability Report.

The key points made in the report & comments are:

New Zealand’s financial system remains sound and the risks facing the system have reduced in the past six months

Global policy uncertainty remains elevated and debt burdens are high in a number of countries

New Zealand’s banks are vulnerable to risks because of their increasing reliance on offshore funding for credit growth

House prices remain elevated relative to incomes and rents, and any resurgence would be of concern

Parts of the dairy sector are carrying excessive debt burdens, and remain vulnerable to a fall in income or an increase in costs

The reserve bank will soon release a consultation paper proposing the addition of debt-to-income (DTI) restrictions to our macro-prudential toolkit

The rate of house building remains insufficient to meet rapid population growth and the existing housing shortage

Majority of dairy farms are likely to have returned to profitability in the 2016/17 season

A significant share of housing loans are being made at high debt-to-income (DTI) ratios

The NZD is little changed in immediate response.

Current indicative levels are:

NZD-USD 0.7080 / 0.7105
NZD-AUD 0.9490 / 0.9515
NZD-EUR 0.6330 / 0.6355
NZD-GBP 0.5505 / 0.5530
NZD-JPY 78.50 / 78.75

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