The Reserve Bank is now required to consider the impact on housing when making monetary and financial policy decisions,
Grant Robertson announced today.
Changes have been made to the Bank’s Monetary Policy Committee’s remit requiring it to take into account government
policy relating to more sustainable house prices, while working towards its objectives.
“The Committee retains autonomy over whether and how its decisions take account of potential housing consequences, but
it will need to explain regularly how it has sought to assess the impacts on housing outcomes,” Grant Robertson said.
A direction has also been issued (under section 68B of the Reserve Bank Act) to the Reserve Bank requiring it to have
regard to government policy on housing in relation to its financial policy functions.
“The Bank will have to take into account the Government’s objective to support more sustainable house prices, including
by dampening investor demand for existing housing stock to help improve affordability for first-home buyers.
“The Reserve Bank’s objectives and mandate remains the same, which is to maintain price stability, support full
employment and promote a sound and stable financial system.
The Minister has also asked the Reserve Bank to provide advice on debt-to-income ratios and interest only mortgages.
“I want to understand the extent to which interest-only mortgages (particularly to speculators) pose risks to financial
stability, and whether restrictions should apply. Some jurisdictions, like Australia, have in the past applied
restrictions on interest-only mortgages due to financial stability risks.
“Following the Bank’s request that the Government allow it to make use of tools such as debt-to-income ratio limits,
I’ve asked for further advice on how the Bank might implement such tools. I have made clear that in principle I would
want these to apply only to investors. It’s important that any potential restrictions do not disproportionately affect
first-home buyers and low-income borrowers.
“Today’s announcement is just the first step as the Government considers broader advice about how to cool the housing
“We know the rapid increases we have seen in recent months are not sustainable, which has meant many first-home buyers
are struggling to access the market. We’ll be making further announcements in the coming weeks on other policy
responses,” Grant Robertson said.