"We review settings annually to ensure they remain appropriate given housing market conditions and financial stability risks. This forms part of the macroprudential policy framework published earlier this year," explains Assistant Governor Financial Stability, Angus McGregor.
In reaching its decision, the FPC considered a range of information, including house price developments, the risk profile of recent mortgage lending, financial strain amongst existing borrowers, and the resilience of the banking system.
"Housing risks are currently contained. Nationally, house prices have remained broadly flat in recent years, while mortgage lending growth has been modest and the share of higher-risk lending remains manageable," Mr McGregor said.
Accordingly, the FPC decided to maintain the current LVR restrictions which have been in place since December last year:
- For owner occupiers, allowing up to 25% of new lending to have an LVR above 80%.
- For investors, allowing up to 10% of new lending to have an LVR above 70%.
"Debt-to-income (DTI) restrictions also remain in place. These complement LVR restrictions and are an important guardrail against the build-up of high-risk lending, particularly during periods of low interest rates and strong housing demand," said Mr McGregor.
We will continue to monitor developments in house prices, mortgage lending, and broader financial stability risks. The next review of macroprudential settings is intended to be in around 12 months, but this can be brought forward if conditions warrant.
More information
- Macroprudential Policy Framework
- Financial Stability Indicators
- Loan-to-value restrictions
- Understanding debt-to-income (DTI) restrictions
