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Saturday, Jun 10, 2017

Minister welcomes DTI consultation

Finance Minister Steven Joyce has today welcomed the release of the Reserve Bank's consultation document on the use of Debt to Income ratios for mortgage borrowers as an additional macro-prudential tool.

"The document is a comprehensive summary of the pros and cons of adding Debt to Income ratios to the Reserve Bank's toolkit of regulatory options,” Mr Joyce says.

"The use of Debt to Income ratio restrictions would be a significant intervention in the housing market, so it's important that all interested parties have their say during this consultation period."

The Reserve Bank has been using Loan to Value ratio (LVR) restrictions since 2013, and they were re-calibrated in 2016.

"The Reserve Bank's analysis suggest that LVR's have helped moderate demand in the residential housing market, particularly in Auckland where prices have been flat to falling over last ten months,” Mr Joyce says.

"The Reserve Bank has stated that even if DTIs were available now, they wouldn't be using them currently. That gives us all time to consider their possible future use carefully."

The consultation runs for 10 weeks and closes on 18 August 2017.

The Reserve Bank’s consultation document is available here.

Tags: reserve bank - debt to income limits - steven joyce

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