Off the wire
• 1st LD: Donald Trump officially wins Republican presidential nomination  • U.S. drone attack kills 5 IS militants in Afghanistan  • Two million Vietnamese experience insecure water access due to drought  • Ecuador receives loan for earthquake recovery  • Profile: Republican presidential nominee Donald Trump  • Clean government essential for New Zealand tourism, researchers warn  • Feature: Martyrs' day marked as historically significant this year in Myanmar  • Cuba, South Africa to enhance economic ties  • Vietnam commences new parliament  • Beijing-Shanghai High-Speed Railway reaps 6.58 bln yuan  
You are here: 　 Home

Exporters welcome New Zealand central bank curbs on mortgage lending

Xinhua, July 20, 2016 Adjust font size:

New Zealand exporters on Wednesday welcomed plans for stricter new loan-to-value ratios on home lending, saying they would give the central bank more room to tackle the country's overvalued currency.

The proposed new restrictions on commercial bank lending from Sept. 1 were aimed at mitigating risks to financial stability, the Reserve Bank of New Zealand (RBNZ) said when announcing them Tuesday.

The RBNZ has been hamstrung for months as it struggles to balance its dual roles of maintaining a sound finance sector and keeping inflation to its target range of 1 percent to 3 percent.

With inflation tracking near zero, the RBNZ has been wary of cutting the official cash rate - currently at 2.25 percent - for fear of further fueling rampant housing prices, particularly around the biggest city of Auckland, which is home to a third of the population.

More freedom to lower interest rates would help tackle one of the RBNZ's other main concerns the over-valued New Zealand dollar and its challenges for exporters, the New Zealand Manufacturers and Exporters Association (NZMEA) said Wednesday.

"We hope this move gives the RBNZ more certainty to push forward with cuts to our interest rates to better align them with those in the rest of the world," NZMEA chief executive Dieter Adam said in a statement.

Rising house prices and rental costs were also adding to an already serious problem of attracting and retaining skilled workers, he said.

"Government needs to find ways to boost the supply of affordable housing in areas suitable for working people, as well as tackling migration-driven demand spikes and some of the longer term tax incentives that encourage investment in existing housing stock over more productive investment," said Adam.

The proposed new restrictions would require banks to demand a deposit of at least 40 percent on up to 95 percent of their lending to residential property investors across New Zealand.

They would also be required to demand a deposit of at least 20 percent on up to 90 percent of lending to owner-occupiers nationwide.

"A sharp correction in house prices is a key risk to the financial system, and there are clear signs that this risk is increasing across the country," RBNZ governor Graeme Wheeler said when announcing the new rules. Endit