Housing credit growth continued to lose momentum in November, according to fresh figures from the Reserve Bank of New Zealand, as the latest investor loan-to-value ratio (LVR) restrictions look to be weighing on borrowing.
Record migration and low interest rate have bolstered the country's housing market, prompting the RBNZ to tighten up lending rules to reduce the risk to the nation's financial stability. New restrictions on lending to property investors with high LVRs came into play October 1.
On an annual basis, housing credit growth lifted 9 percent in November versus 9.1 percent in October and 9.2 per cent in September and August.
"The Reserve Bank of New Zealand's latest LVR lending restrictions appear to be weighing on investor demand," ASB Bank economic Kim Mundy said in a note.
The investors' share of new lending was 27 per cent in November, its lowest level since the data series began in August 2014, down from a high of 38 per cent a few months ago.
Mundy expects the pace of housing credit growth to continue to slow, with further slowing in the housing market. "As a result, we expect the Reserve Bank of New Zealand to leave the official cash rate on hold for the foreseeable future," said Mundy.
