Investing.com - Rules that came into effect in October limiting the ability of banks to lend to customers seeking loans above 80% of a house's value have shown bite, according to data released by the Reserve Bank of New Zealand on Thursday.
Loans above 80% of the value of property were just 12.8% of new commitments in October, down from 25.5% in September and 26.5% in August, according to data from the RBNZ.
The high loan-to-value ratio (LVR) rules are aimed at cooling surging house prices that can ramp up inflation pressures in an economy still rebuilding from an earthquake that hit the city of Christchurch in 2011 and a shortage of affordable housing in cities like Auckland.
Under the rules, banks can lend no more than 10% of their total new mortgage lending with a LVR above 80%.
"The reduction in high-LVR lending will help to reduce the risks of a sharp correction in house prices in an already overvalued housing market," said RBNZ deputy governor, Grant Spencer, adding that he expects a bigger impact once banks clear pre-approvals made prior to the new rules coming into effect.
The RBNZ said it will provide data on the loan limits monthly.
Loans above 80% of the value of property were just 12.8% of new commitments in October, down from 25.5% in September and 26.5% in August, according to data from the RBNZ.
The high loan-to-value ratio (LVR) rules are aimed at cooling surging house prices that can ramp up inflation pressures in an economy still rebuilding from an earthquake that hit the city of Christchurch in 2011 and a shortage of affordable housing in cities like Auckland.
Under the rules, banks can lend no more than 10% of their total new mortgage lending with a LVR above 80%.
"The reduction in high-LVR lending will help to reduce the risks of a sharp correction in house prices in an already overvalued housing market," said RBNZ deputy governor, Grant Spencer, adding that he expects a bigger impact once banks clear pre-approvals made prior to the new rules coming into effect.
The RBNZ said it will provide data on the loan limits monthly.