FX.co ★ RBNZ to Relax LVR Rules from December 1

The Reserve Bank of New Zealand (RBNZ) revealed plans on Tuesday to relax the mortgage loan-to-value ratio (LVR) restrictions, effective December 1. This decision comes as house prices have adjusted to sustainable levels following a consistent drop. From December 1, financial institutions will have the capability to issue up to 25% of their new mortgage loans to owner-occupiers who have deposits of less than 20% of the property's value, an increase from the current threshold of 20%. "The easing of LVR settings will provide banks with greater lending flexibility, enhancing market efficiency and credit accessibility, especially for first-time homebuyers," stated Angus McGregor, the Acting Assistant Governor of the Reserve Bank of New Zealand, as reported by Reuters. Currently, house prices have decreased by about 16% from their peak in 2021, with the Real Estate Institute of New Zealand reporting a further 1.5% annual decline in property prices as of September.