RBNZ says house price growth to slow after current recovery phase

The Reserve Bank has warned in its 6 monthly Financial Stability Report that it expects the current strength in the housing market to ease off as interest rates rise, given house prices are still elevated compared to incomes. "While banks have tightened their lending standards for residential borrowers during the financial crisis, there have been signs of an easing in recent months, with some banks prepared to offer housing loans at relatively high loan to value ratios," the bank said in the report. "The housing market is currently strengthening, but we believe house price growth will slow after the current recovery phase. We would encourage the banks to avoid any return to riskier mortgage lending practices," it said.