ANZ economists say it is "highly likely" there will be an announcement from the Reserve Bank this week on the anticipated "speed limits" on high loan to value lending.
The RBNZ has previously indicated it is looking at such speed limits both to protect financial stability and in an effort to dampen the rising housing market. See here for articles on LVRs.
In their weekly "market focus" the ANZ economists note the timing of the Government's announcement to assist first home buyers during the weekend. "
"The announcement in itself is not surprising; housing affordability (especially in Auckland) will clearly be an election issue, and a response was to be expected," they say.
"...It’s just musing, but given the Government’s evident desire to ensure first home buyers do not bear the brunt of the speculated pending LVR restrictions, it seems highly likely we’ll see something on the LVR front itself this week."
They say such an announcement will probably be the anticipated moves to introduce speed limits on low deposit lending.
"With the RBNZ noting that about 30% of the rise in housing credit had come from 80+ percent LVR lending, such a scheme is likely to directly impact on the supply of credit," they say.
"There will be casualties from such a move, with low-deposit borrowers effectively locked out of the housing market (many are in Auckland anyway), but the [central] bank is likely to deem it a worthwhile sacrifice to prevent a property price crunch and its subsequent fallout."
The economists note that the July REINZ housing market data confirmed the market continues to strengthen.
"Mortgage approvals took a bit of a breather over July, with QV attributing this to a tightening in lending policy in anticipation of prudential policy changes by the RBNZ.
"There have been no recent announcements from the RBNZ on the prudential policy front, but the RBNZ are likely to have been pleased by the lift in longer-term fixed mortgage interest rates, albeit to still historically low levels," they said.
3 Comments
The economists note that the July REINZ housing market data confirmed the market continues to strengthen.
Sure. And just as the REINZ chooses to stop making any of the the detail from their Housing Price Index freely available. So we are left with PR and easing median prices:
However, the national median price eased back $9,000 compared with June to $385,000, and is now $15,000 below the record median set in March 2013. In Auckland the median price decreased to $552,000 in July from $555,000.
That despite: "the market remains tight and overall inventory levels are still very low," Turner said.
nbr reports increased prices
http://www.nbr.co.nz/article/house-prices-july-buyers-get-ahead-lending-restrictions-bd-144241
interest reports decreased prices from the same data
oh its all just too much!
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