Govt, Reserve Bank discuss loan restrictions
Finance Minister Bill English has confirmed that the Government and the Reserve Bank are discussing debt-to-income restrictions on mortgage lending.
The restrictions are one of the tools that can be used to limit lending and cool down housing markets.
They mean the amount of a loan is linked to a person's income.
They're used in other countries, and in Britain the cap it 4.5 times annual income.
Reserve Bank governor Graeme Wheeler said last month debt-to-income ratios could be one of the potential responses to rising house prices.
If he decided he wanted to introduce the restrictions, the Government would have to agree to it.
Mr English said today discussions had started, but the Reserve Bank hadn't made a formal request.
"We'll wait and see what the analysis tells us, I don't want to pre-judge the discussions with the bank," he told reporters.
Labour says the Government shouldn't agree to debt-to-income restrictions.
"They will lock first home buyers out of the market and make the Kiwi dream of home ownership a near-impossibility," said finance spokesman Grant Robertson.
"The Government has to stop outsourcing the housing crisis to the Reserve Bank."
Mr Robertson says Auckland house prices are 10 times the average income, and if a cap such as that which is used in Britain was introduced it would have "a devastating impact" on house hunters.