HiFX Data Update - RBNZ Financial Stability Report

HiFX Data Update - RBNZ Financial Stability Report

The RBNZ has just released its Financial Stability Report.

The key points in report are:

• Reserve Bank of NZ stability review says financial system risks have eased, but remain high

• Slower mortgage lending growth and house price inflation have reduced risk.

• RBNZ are to ease LVR’s from start of 2019:

o Banks able to provide 20% (from 15%) of new owner-occupier loans to owner-occupier borrowers with less than 20% deposit

o Banks able to provide 5% of new investor loans to investors borrowers with less than 30% (lowered from 35%)

• High debt and asset prices mean the global economy remains vulnerable to shocks

• High debt levels mean NZ households remain vulnerable to financial risk

• Recent slower mortgage lending growth has reduced financial risk somewhat

• Banks need to better manage their conduct risk and lend responsibly

• Longer term, financial firms need to manage risks from climate change

• Preliminary view that higher capital requirements are necessary

• Will reassess whether banking system has enough capital to weather future extreme shocks

• Domestic banking system remains sound

• Mortgage credit growth and house price inflation have eased to more sustainable rates

The NZD is slightly higher in immediate response.

Current indicative levels are:

NZD-USD 0.6780 / 0.6805
NZD-AUD 0.9385 / 0.9410
NZD-EUR 0.6000 / 0.6025
NZD-GBP 0.5320 / 0.5345
NZD-JPY 77.15 / 77.40

Please call for further information or pricing.

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

https://www.rbnz.govt.nz/news/2018/11/reserve-bank-to-ease-loan-to-value-ratio-restrictions

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