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It's just what we need: more saving, less spending and lower debt loads, says Bernard Hickey

The Reserve Bank's Monetary Policy Statement revealed signs New Zealanders may have pulled their heads in after the global financial crisis.

The bank pointed out that house prices are rising but Kiwis appear not to be going on a debt-fuelled spending spree.

Instead, we may be selling expensive houses to buy something cheaper, requiring less debt. Or we are keeping our mortgage payments the same to pay down debt quicker.

Through 2006 and 2007 homeowners used the equity in their houses to buy cars, boats, holidays and flat-screen televisions.

This spree loaded households and the nation with foreign debt, which rose almost $100 billion or 30 per cent of gross domestic product in five years.

The fear was this year's turnaround in house prices could lead to the same consumption boom, higher interest rates and lower economic growth over the long term.

That in turn would restrict income growth and encourage more Kiwis to leave for higher wages and more affordable housing elsewhere.

The Reserve Bank this week suggested it's different this time, leaving the official cash rate on hold at a record low 2.5 per cent despite forecast house price growth of 12 per cent in the year to March 2010.

It pointed to figures showing the value of housing sales at $2.3 billion in the month of October, up $800 million from the same month a year ago.

Yet extra lending by the banks was just $600 million in October, up $400 million from a year ago.

This is a diversion from a tight connection in the past between the value of houses bought in any one month and the extra household lending in that month.

The Reserve Bank said it is seeing anecdotal evidence that "a high proportion of sales have been undertaken with the intention of actively reducing debt".

It's just what we need: more saving, less spending and lower debt loads.