20 per cent higher in comparison to the same month last year.
This has meant that the goal of an affordable, healthy and accessible home has become remote and therefore, the Reserve Bank of New Zealand announced plans to toughen its mortgage-lending rules in response to the crisis. One key measure introduced under the initiative is the reduction in the portion of loans banks may offer to owner occupiers with less than 20 per cent of their deposit, which will come into force from 1 October, after consultations.
Moreover, the central bank also plans to launch consultations regarding the implementation of interest rate floors and debt-to-income (DTI) restrictions, with the aim of ensuring that borrowers can afford to service their mortgages. “We are focused on ensuring borrowers are resilient to a range of future economic and financial conditions,” RBNZ’s Deputy Governor Geoff Bascand said on Tuesday (3 August).
He noted that the Reserve Bank was particularly concerned regarding those who have borrowed at high LVRs (loan-to-value ratios) and high DTIs over the past 12 months. “If house prices were to fall, some buyers could face the possibility of negative equity – which means the value of their property is below the outstanding balance on their mortgage,” he added.
The central bank’s announcement came just a day after the New Zealand’s human rights commission said it will be launching a national inquiry into the housing crisis in the country, describing the situation as a “massive human rights failure”
