'OK. That's enough. Here's the floor.'

RBNZ says doesn't think house prices will fall much more and are near sustainable levels, so it has decided to loosen the Loan to Value Ratio restrictions for owner-occupiers and investors

The RBNZ says the current LVRs are impeding the provision of credit to some otherwise creditworthy borrowers. Photo: Lynn Grieveson / The Kākā

TL;DR: The Reserve Bank (Te Pūtea Matua) has surprised everyone by announcing this morning it will loosen Loan to Value Ratio (LVR) restrictions on borrowing for both owner-occupiers and landlords, saying it didn’t expect house prices to fall much more as they were at ‘sustainable’ levels.

In effect, the Reserve Bank has intervened to put a floor under the housing market and boost an economy veering towards a recession without having to take the politically and economically difficult decision to cut interest rates at a time when inflation is still over 6%.

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