In light of financial stability risks, ANZ Research expects the Reserve Bank of New Zealand will take a cautious and gradual approach to easing loan-to-value ratio restrictions.
Buyers entering the market now have bigger buffers, helping to mitigate the risk and potential fallout of a disorderly housing market downturn, with macro-prudential policy having played an important role.
The pace of macro-prudential easing will depend on how housing market and credit conditions evolve over coming months.
But one thing seems clear: the RBNZ will want to be sure there’s no more fuel in the tank before taking its foot completely off the brake.
Liz Kendall is a Senior New Zealand Economist at ANZ