Reserve Bank of NZ (RBNZ) Enhancing the efficiency of macroprudential policy: activating DTIs

Submission by to the Reserve Bank of NZ (RBNZ) on the Enhancing the efficiency of macroprudential policy: activating DTIs and loosening LVRs Consultation Paper March 2024 Section 1.0 Introduction 1.1 BusinessNZ1 welcomes the opportunity to make a submission to the Reserve Bank of NZ on Enhancing the efficiency of macroprudential policy: activating DTIs and loosening LVRs Consultation Paper (the “C. [...] None of these policy issues lie within the remit of the RBNZ.”2 1.8 Notwithstanding the above, we take significant confidence from the proposed approach by the Reserve Bank that the DTI will have limited or no impact during “normal” times and will only really impact on the availability of debt during times of significant stress on house prices. [...] RECOMMENDATION BusinessNZ recommends that: Given the the lack of cost/benefit analysis of the proposals mooted in the Consultation Paper, and given the new Government’s stated emphasis on improving the quality and efficiency of regulation, it would seem logical and desirable that the proposals are subject to a thorough cost/benefit analysis before proceeding further. [...] However, BusinessNZ would suggest that while the proposed changes to the LVRs and introduction of the DTI restrictions will be monitored by the Reserve Bank as to whether they are having the intended effect, BusinessNZ would be loath to suggest regular adjustments to the restrictions for fear of creating uncertainty for households and investors. [...] 9 RECOMMENDATION BusinessNZ recommends that: Given the the lack of cost/benefit analysis of the proposals mooted in the Consultation Paper, and given the new Government’s stated emphasis on improving the quality and efficiency of regulation, it would seem logical and desirable that the proposals are subject to a thorough cost/benefit analysis before proceeding further.