BRIEF-RBNZ Updates On Proposed Policy For Debt Serviceability Restrictions On Residential Mortgage Lending

Reserve Bank of New Zealand: * UPDATES ON PROPOSED POLICY FOR DEBT SERVICEABILITY RESTRICTIONS ON RESIDENTIAL MORTGAGE LENDING

* DSR CONSULTATION CLOSED ON 28 FEB, WE ARE TODAY PUBLISHING SUMMARY OF SUBMISSIONS RECEIVED, ALONG WITH RESPONSES TO KEY POINTS RAISED * EXPECT TO SEE A SLOWDOWN IN HIGH-DTI LENDING OVER THE COMING MONTHS

* ITS MODELLING INDICATES FIRST-HOME BUYERS WOULD BE LEAST IMPACTED BY DEBT-TO-INCOME RESTRICTION * INTEND TO HAVE FRAMEWORK FINALISED BY LATE 2022, SO THAT RESTRICTIONS COULD BE INTRODUCED BY MID-2023 IF REQUIRED

* DO NOT SEE URGENT NEED TO IMPOSE INTERIM TEST RATE FLOOR AT THIS STAGE, BUT MONITORING SITUATION CLOSELY * BANKS’ TEST INTEREST RATES HAVE BEGUN TO RISE IN LINE WITH MARKET RATES, AND EXPECT TO SEE SLOWDOWN IN HIGH-DTI LENDING OVER COMING MONTHS

* DO NOT RULE OUT IMPOSING INTERIM TEST RATE FLOOR IF THERE IS RESURGENCE OF RISKY LENDING IN HOUSING MARKET Source text - http://bitly.ws/qx5G Further company coverage: