LVR restrictions on the property market have been successful “during a period of heightened housing market risks”, according to the Reserve Bank deputy governor and head of financial stability, Geoff Bascand.
Bascand believes the RBNZ should retain its ability to use macroprudential policies. The central bank’s evaluation of macroprudential policy and LVRs comes as part of Phase 2 of the review of the Reserve Bank Act.
Bascand said macroprudential policy would continue to be used alongside other measures in order to keep the lid on the housing market.
“Macroprudential policy is not about eliminating risks for banks and households, reducing house prices, or managing the business cycle. Affordability pressures on the housing market and the rental market require a much broader policy response,” Bascand said.
It is unclear when the Reserve Bank will further ease LVR restrictions on owner-occupiers and investors after loosening speed limits in January.
In a recent interview with GRTV, RBNZ Governor Adrian Orr said “We would like to be heading back towards a more neutral path.” He added: “We’ll talk about that, our decision, at the forthcoming Financial Stability Report and that’ll be something we review every six months.”
The central bank’s next FSR report is due on May 29.