29 Apr 2014

RBNZ says mortgage controls working

6:45 pm on 29 April 2014

The Reserve Bank says its restriction on providing mortgages to people with small deposits is working.

High loan-to-value ratio mortgage lending has fallen to 5.6 percent of total mortgage lending for the six months to March, well below the 10 percent limit.

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Photo: 123RF

The central bank introduced lending restrictions for people with small deposits in October to help keep a lid on house prices, particulary in Auckland and Christchurch.

Under the restrictions, no more than 10 percent of a bank's new mortgage lending can be loaned to people with less than a 20 percent deposit.

The bank's deputy governor, Grant Spencer, says the central bank's initial assessment is that the restrictions have helped reduce price inflation.

He says the bank will make a more in-depth assessment of the policy and its impact on the housing market in next month's Financial Stability Report.