Auckland’s property market is in the firing line of the Reserve Bank who are considering imposing ‘speed’ limits. These would restrict how much of a bank’s total lending can be for low deposit home loans, and is a bid to cool the market.
The move is designed to avoid having a large number of borrowers with negative equity in their homes (ie they owe more than the property is worth), as was seen in the US after the global financial crisis.
The Reserve Bank is consulting with banks, and it will be at least August before such an initiative would be launched.
Source and full story: NZ Herald