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Reserve bank cools with interest only restrictions

Reserve banks have taken the first step towards implementing debt-to-income restrictions, but have kept the likelihood of introducing interest-only lending restrictions low.

Wednesday, June 16, 2021 10:34 AM

The central bank today confirmed that DTI will be added to the regulatory toolkit as it seeks to maintain the lid of the runaway housing market.

However, while the unpopular DTI is expected to come into effect in the next six months, interest-only lending limits seem to be off the table so far.

In a technical summary note released today, the RBNZ said it evaluated the effectiveness of interest-only lending limits: “Currently, interest-only lending to investors (or other borrowers) poses a financial stability risk. We decided not to bring it. It would have a negative impact on the government’s housing objectives, and we also found that limiting interest-only lending was difficult to implement and implement. “

Investors have been upset by the possibility of introducing DTI after a year of strict regulation, but comments seem to have removed interest-only restraints so far.

tag: Reserve bank

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Reserve bank cools with interest only restrictions

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