From the Australian Financial Review:
- A Kiwi banking academic has slammed the Reserve Bank of New Zealand’s policy of restricting the number of loans banks can write with loan-to-value ratios over 80 per cent
- Is warning Australia against adopting similar macroprudential rules
Associate Professor Tripe, Massey University’s director of the centre for financial services and markets, says:
- “It is in danger of going back to the old policy of the 1970s and the regulated era and all that sort of thing”
Blames the policy for significantly cooling the first-home buyer market … first-home sales have dropped from 24 per cent to 16 per cent of sales in eight months
- “Every time you intervene you create some market distortions; the question is whether the distortions are worse than the problem you are trying to solve”
- “If and when the restrictions are eased, there will be a surge of activity by first-time home buyers, which will be likely to push up prices, particularly in Auckland”
(Note, the RBNZ is expected to remove LVRs in 2015).
More at the article, but it is gated: Kiwi professor rejects loan-to-value ratios as house-price dampener
