28 Oct 2020

Economists call for LVR restrictions to return

From Morning Report, 7:14 am on 28 October 2020

Commercial bank economists are calling on the Reserve Bank of New Zealand to reinstate lending restrictions, warning the housing market is spiraling out of control.

In May, the Reserve Bank temporarily removed Loan to Value Ratio restrictions, freeing banks to sell mortgages to buyers with small deposits.

Between May and September lending to investors was up 60 percent and last month banks lent out more than 7.3 billion dollars to all housebuyers - marking an all time record.

Mike Jones is a Senior Economist at ASB Bank.