NZ Herald
  • Home
  • Latest news
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather forecasts

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
    • The Great NZ Road Trip
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
    • Cooking the Books
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • What the Actual
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Companies / Banking and finance

Reserve Bank’s proposed debt-to-income restrictions unlikely to have much bite, for now

Jenée Tibshraeny
By Jenée Tibshraeny
Wellington Business Editor·NZ Herald·
5 Dec, 2023 04:00 PM3 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

he mortgage-free Governor of the Reserve Bank of NZ, Adrian Orr, says inflation is ‘evil’. In this extensive interview, he discusses his plan to reduce interest rates and his regrets.

The Reserve Bank (RBNZ) has hinted new mortgage lending rules it might impose on banks next year are unlikely to be too restrictive.

In April, the RBNZ gave banks a year to ready their systems for the possible introduction of debt-to-income (DTI) restrictions.

These limit the portion of new mortgages banks can issue borrowers seeking relatively large amounts of debt compared to their incomes.

The rules basically see the RBNZ tell banks, “No more than x per cent of your new lending can go to borrowers wanting debt worth x times their incomes.”

Speaking to the Herald, RBNZ deputy governor Christian Hawkesby wouldn’t say when the RBNZ would implement the restrictions, which former finance minister Grant Robertson empowered it to impose to protect the stability of the financial system.

Advertisement
Advertise with NZME.

Nor would he specify the DTI ratio above which lending would be limited.

However, he said the RBNZ wasn’t keen to adjust DTI restrictions as frequently as it adjusts loan-to-value ratio (LVR) restrictions, which limit bank lending to borrowers with relatively small deposits.

So, a set restriction would have less bite in the current high interest rate environment, where people can’t afford to take out large mortgages compared to their incomes anyway, than it would in a low interest rate environment.

Advertisement
Advertise with NZME.

For example, someone who earned $100,000 a year would struggle to convince their bank they could repay a 30-year mortgage worth seven times their income ($700,000) at a fixed interest rate of 7 per cent, as their weekly repayments would total $1074.

But they may have had more luck a few years ago, when mortgage rates were only 3 per cent, as their repayments would have been $681.

Hawkesby said DTI restrictions have a “natural stabilising tendency”.

“At the moment, DTI is more subdued because of the environment we’re in. That won’t always be the case,” he said.

Indeed, in September, 5 per cent of banks’ new mortgage lending went to borrowers taking out mortgages worth more than seven times their annual incomes.

This was the lowest percentage since the RBNZ started collecting this data in 2017.

However, when interest rates were very low and the property market was red hot in January 2021, 27 per cent of banks’ new commitments went to borrowers with DTI ratios above seven.

Hawkesby said one of the benefits of DTI restrictions is that they can be put on at a time they wouldn’t be very restrictive.

Advertisement
Advertise with NZME.

But if the market turned and demand for riskier mortgages picked up, they would provide a “natural constraint”.

Once again, Hawkesby spoke in general terms and didn’t say when the RBNZ would implement the rules or what they would look like.

In April, the RBNZ said it could set DTI restrictions at different levels for owner-occupiers and investors. It does this with its LVR restrictions, which are tougher for investors.

It could also make exemptions, including for those seeking mortgages for new builds.

Because DTI restrictions would complement LVR restrictions, LVR restrictions could be loosened if DTI restrictions were introduced.

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.

Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Latest from Banking and finance

Premium
Opinion

Opinion: Nicola Willis should challenge the RBNZ on prudential rules

13 May 12:00 AM
Business|personal finance

‘Rip-off’: App developer and Consumer say fees will stifle open banking

08 May 11:00 PM
Premium
Business|companies

ANZ NZ's first-half profit edges up to $1.16 billion

07 May 11:39 PM

Connected workers are safer workers 

sponsored
Advertisement
Advertise with NZME.

Latest from Banking and finance

Premium
Opinion: Nicola Willis should challenge the RBNZ on prudential rules

Opinion: Nicola Willis should challenge the RBNZ on prudential rules

13 May 12:00 AM

The minister should interfere in RBNZ regulation, say Simon Jensen and Andrew Body.

‘Rip-off’: App developer and Consumer say fees will stifle open banking

‘Rip-off’: App developer and Consumer say fees will stifle open banking

08 May 11:00 PM
Premium
ANZ NZ's first-half profit edges up to $1.16 billion

ANZ NZ's first-half profit edges up to $1.16 billion

07 May 11:39 PM
Premium
NZ banks face repaying $9.2b in cheap Covid loans in coming months

NZ banks face repaying $9.2b in cheap Covid loans in coming months

07 May 09:00 PM
The Hire A Hubby hero turning handyman stereotypes on their head
sponsored

The Hire A Hubby hero turning handyman stereotypes on their head

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • What the Actual
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven CarGuide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP