People looking for a home loan may find it tougher, after the Reserve Bank signalled a possible further clampdown on lending.
The central bank said it was worried about how much debt people were getting into as the official cash rate remains at 0.25 per cent.
In its newly released six-monthly financial stability report , Deputy Governor Geoff Bascand said low interest rates have led to increased risk-taking, which makes new home loan borrowers more vulnerable to any rise in rates or a loss in income.
“We are prepared to further tighten lending restrictions for housing if required,” he said.
“However, for now, we will be watching how market conditions respond to the Government’s recent housing policy changes and our most recent LVR [loan-to-value] changes which only came in this week.”
The move means low interest rates look set to stay for some time yet.
Reserve Bank Governor Adrian Orr said the economy is relatively sound, but there are still some challenges around the Covid-19 pandemic.
“Yet, despite doing better than feared, border restrictions, supply chain disruptions, and social distancing have reduced activity in affected sectors, and some businesses remain vulnerable.”
Meanwhile, the unemployment rate has dropped to 4.7 per cent in the three months leading up to March. That figure was 4.9 per cent at the end of 2020.
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