NZ central bank weighs rule-changes for residential property investors

[WELLINGTON] The Reserve Bank of New Zealand (RBNZ) said on Thursday it is looking at requiring banks to hold more capital to back loans to residential property investors, to guard against fallout should there be a housing crash.

The RBNZ said it would start a month-long consultation on how to draw up and implement such a measure, which would include looking at whether it would apply to investors living on the mortgaged property, and whether loan-repayments are reliant on rents. "International evidence suggests that default rates and loss rates experienced during sharp housing market downturns tend to be higher for residential property investment loans than for loans to owner occupiers," said RBNZ head of prudential supervision Toby Fiennes.

The bank looked at the issue last year but reconsidered it after submissions from property investors and banks.

REUTERS