New Zealand’s central bank plans to ease its loan-to-value ratio (LVR) limits from December 1. The change aims to give banks more flexibility to issue mortgages.
Under the new rules, 25% of newly issued owner-occupier home loans can go to buyers who deposit less than 20%. Currently, that share is capped at 20%.
Reserve Bank Acting Assistant Governor Angus McGregor said this step is justified because housing prices now align more closely with sustainable estimates. He added other stress tests, like the debt-to-income limits introduced last year, will stay in place.
House prices in New Zealand have fallen about 16% from their 2021 peak. In September, prices dropped 1.5% year-on-year, according to the Real Estate Institute.
Finance Minister Nicola Willis welcomed the move, saying it will help first-time buyers access the housing market.
