We have concluded that the introduction of debt-to-income (DTI) restrictions last year means LVR settings can be less restrictive on average. This includes looser default settings that we expect will be in place most of the time, except for when risks are particularly elevated.
We have completed a consultation with banks on changes to their Conditions of Registration, which is required to implement the LVR easing. We can now confirm the changes to LVR restrictions will go ahead as planned.
LVR settings will ease with effect from 1 December:
- For owner occupiers, the limit on the share of new lending allowed with an LVR above 80% will increase to 25% (up from 20%).
- For investors, the limit on the share of new lending allowed with an LVR above 70% will increase to 10% (up from 5%).
We will continue to closely monitor housing-related risks and the impact of these changes. The new Financial Policy Committee will review LVR settings at least annually and can adjust if risks become elevated.
More information
Reserve Bank to ease LVR restrictions
Our approach to macroprudential policy through the cycle
Reserve Bank establishes new Financial Policy Committee
Loan-to-value ratio restrictions explained
