The Reserve Bank is asking the Government for new powers which would limit lending to home buyers if they did not earn enough.
If introduced, the restrictions would restrict what New Zealanders could borrow for a mortgage relative to their income. It is used in the United Kingdom, where buyers cannot get a mortgage higher than 4.5 times their annual earnings.
Reserve Bank governor Graeme Wheeler said he was not proposing to use the tool at this time, but he was signalling he wanted it in reserve, just in case.
“Restrictions on high [debt-to-income] lending could be warranted if housing market imbalances were to deteriorate further.”
Get on with it!