RBNZ Eases LVR, Tightens DTI Lending Rules Effective July 1

May 28, 2024, 01:47 AM

The Reserve Bank of New Zealand (RBNZ) has announced significant changes to its lending rules, effective from July 1. The central bank confirms loosening of loan-to-value ratio (LVR) restrictions while simultaneously implementing new debt-to-income (DTI) restrictions. These new DTI rules will limit the amount of high-DTI lending that banks can undertake, allowing only 20% of their lending to exceed specified limits. Additionally, banks will be restricted to lending no more than six times a borrower's annual pre-tax income for house purchases. These measures aim to balance the housing market by tightening some home loan rules while providing some relief through eased LVR restrictions.