Reserve Bank governor Graeme Wheeler has outlined the criteria for removing loan-to-value ratio restrictions, suggesting that they be removed in stages.
In his last major speech as central bank governor, Wheeler hinted an eventual roll back LVRs following calls from real estate lobby groups and a comment from prime minister Bill English suggesting a need for time frame for their removal, according to a report from the NZ Herald.
“LVRs are not expected to be a permanent measure and the conditions for their removal would be: signs that financial stability risks have eased; and a degree of confidence that these risks won’t worsen again when LVRs are removed,” Wheeler said.
“The bank will continue to review developments, bearing in mind that removal could be made in stages as a safeguard to a resurgent market.”
However, Wheeler didn’t provide a time frame and warned that underlying supply and demand issues with the market remain unresolved.
Wheeler also shared an upbeat assessment of the local economy including stronger GDP and employment growth.
This was Wheeler’s last major scheduled speech before his stepping down on Sept. 26.
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