RBNZ Stability Report & Governor Wheeler Comments

RBNZ Stability Report & Governor Wheeler Comments

The RBNZ has just released its Financial Stability Report & Governor Wheeler comments.

The key points in report are:

• Financial system is sounds but faces significant risks.

• To require Auckland residential property investors to deposit at least 30% on bank loans

• Plans to raise limits on high LVR mortgage outside Auckland to 15% from 10%, but to keep 10% limit in Auckland

• Establish new asset class for bank loans to house property investors

• Supply considerations are the main reason for high Auckland house price inflation, but investor activity are making the situation worse

• Proposed changes to start October, aims to slow Auckland house price rise

• Non-resident house buyers make up circa 8-10% of Auckland market.

• Sees risks in high Auckland house prices, falling dairy incomes, global low rates

• Recent fall in NZD$ helpful, NZD Trade-weighted index trades above sustainable levels

• Risks will increase if low milk prices persist.

• 50% of all dairy farm debt is held by only 20% of farmers

• No comment of monetary policy

The NZD is a dropped sharply in immediate response, only to reverse direction to push higher a short time later.

Current indicative levels are:

NZD-USD 0.7340 / 0.7365
NZD-AUD 0.9205 / 0.8235
NZD-EUR 0.6545 / 0.6570
NZD-GBP 0.4680 / 0.4705
NZD-JPY 88.00 / 88.25

Please call for further information or pricing.

Below is the link to the full RBNZ statement and report:

http://rbnz.govt.nz/financial_stability/financial_stability_report/

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