Phase two of the review of the Reserve Bank Act is underway, and the central bank says LVRs could be applied to non-bank deposit takers in the future.
A recent consultation document, released as part of the review, states: "The Reserve Bank’s power to apply LVRs is currently contained in the powers to regulate banks in the Reserve Bank Act. While lending standards could continue to be empowered alongside other prudential controls over banks, an alternative could be to make lending standards applicable to all relevant lenders (even if they do not take deposits)."
The RBNZ says current LVR restrictions "could be undermined" if non-banks "are willing to offer the loans that the Reserve Bank has restricted".
The central bank added: "In many other countries, lending restrictions are applied to all lenders by default, rather than simply to deposit takers, but it would be a significant change in New Zealand."
The Reserve Bank said it may look to "retain the option" of extending LVRs to non-banks.
The central bank is weighing its future use of LVR restrictions, after loosening speed limits from January.
In a recent speech, deputy governor Geoff Bascand said the RBNZ could even make LVR a permanent fixture.
Bascand said making LVR permanent was "an important policy question for future research", and could "continue to guard against the very risky forms of lending, and may better prepare the banking system to adapt to a more restrictive calibration if risks re-emerge".
Read the latest RBNZ consultation document here. The consultation closes on August 16.