Reserve Bank of New Zealand Financial Stability Report
Headlines via Reuters
- financial system well-placed to support economic recovery despite uncertainty and risks
- more recent delta outbreak is creating stresses for some industries and regions - particularly in Auckland
- with the risk of global inflation heightened, already stretched asset prices are facing headwinds from rising global interest rates
- supply chain bottlenecks and inflation are adding to stresses in some sectors.
- transition towards living with covid-19 in the community as a managed, endemic disease is changing consumer behaviour
- strong demand for housing has pushed house prices above their sustainable level, increasing the chance of a correction
- recent buyers are borrowing more relative to their income, and may be vulnerable to higher mortgage rates or a fall in house prices.
- will soon consult on the merits of implementing debt servicing restrictions to lean against these housing risks
- intend to increase the minimum core funding ratio (CFR) requirement to its previous level of 75 percent on 1 January 2022
- intend to increase minimum cfr requirement to its previous level of 75% on 1 jan 2022, subject to no significant worsening in econ condition
- intend to increase min core funding ratio requirement to previous level of 75% on 1 jan 2022, subject to no significant worsening in economic conditions
- capital requirements for banks to progressively increase from 1 July 2022 & is encouraging to see them increasing ahead of these requirements
- higher global interest rates could prove to be a headwind to asset prices
- we expect banks to be more cautious about high debt-to-income loans given the risks of rising interest rates and to the economic outlook
Kiwi $ not fussed by the release.
