WATCH: Bernard Hickey talks with Kiwibank chief economist Jarrod Kerr about the Reserve Banks decision to remove rules restricting high loan to value ratio lending.
Bernard Hickey talks firstly with Jarrod Kerr and Newsroom’s markets editor Andrew Patterson about the fall in US oil prices to a negative price overnight.
They then talk about the Reserve Bank’s decision on Tuesday to remove rules restricting loan to value ratios to below 80 percent and below 60 percent for rental property investors.
The rules were put in place in 2013 under previous Governor Graeme Wheeler to restrict the amount of high LVR lending to first home buyers and rental property investors. The rules originally limited banks to less than 10 percent of new lending being to people with LVRs of over 80 percent.
That was subsequently tightened to five percent for investment properties with an LVR of no more than 60 percent. It was eased twice in 2019.
Here is a table detailing the various changes since 2013.
Jarrod and Bernard talk about how the policy might have restricted banks from allowing deferrals and supportive lending to those who have lost their jobs or need to bolster a small business.
This is part of a daily ‘Bernard and Jarrod Zoom out for Lunch’ webinar series during the lockdown.
Kiwibank is a foundation supporter of Newsroom.
