16 May 2014

Lending rules had bigger impact - bank

1:22 pm on 16 May 2014

The Reserve Bank has published a paper saying mortgage lending restrictions have been been more effective in slowing house prices than first thought.

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Photo: RNZ

On Wednesday, the bank said house price growth was 2.5 percent lower than it would have been without the limits on low deposit loans.

In a paper released on Friday it estimates house price growth is 3.3 percentage points lower than it would have been without the restrictions.

That means instead of house prices growing about 8.5 percent annually, it would have been closer to 12 percent.

A spokeswoman for the central bank said the figure published on Friday was the outcome of new research and a more reliable one.

The Reserve Bank introduced the restriction on lending to people with small deposits in October to cool the overheated housing market, which it feared could damage the financial system in the event of an economic shock.