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    RBNZ Updates Framework for Restrictions on High LVR Mortgage Lending

    January 02, 2018

    RBNZ updated the framework for restrictions on high loan-to-valuation ratio (LVR) residential mortgage lending. The framework sets out the RBNZ framework for imposing quantitative restrictions on the share of high LVR loans by registered banks to the residential property sector. Loans to the residential property sector include loans secured by owner-occupied residential property and loans secured by residential investment property.

    The framework is intended to help maintain financial stability, by providing RBNZ with the practical means of imposing restrictions on the share of high-LVR residential mortgage lending undertaken by registered banks. As set out in the Memorandum of Understanding on “Macroprudential policy and operating guidelines,” quantitative restrictions on the share of high LVR loans to the residential property sector may be deployed to address systemic risks to financial stability. This policy applies to all banks registered in New Zealand. However, for overseas incorporated banks that have a branch in New Zealand, the high-LVR lending restrictions that are imposed would only apply to mortgage lending originated by the branch in New Zealand.


    Related Link: Framework for LVR Restrictions (PDF)

    Keywords: Asia Pacific, New Zealand, Banking, Residential Mortgage Lending, LVR Restrictions, RBNZ

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