Prime Minister Bill English has hinted that the Reserve Bank should consider removing restrictions on mortgage lending.

English said today that there had been a "correction" in the New Zealand housing market, and that "raised the question of how long [the restrictions] would be there for".

"It's important that the people who put them in place have thought through the conditions under which they removed the LVRs.

"Because ideally, they are not a permanent feature of the market."


He said that the loan-to-value (LVR) rules, which restrict how much can be leant to people with a deposit of less than 20 per cent, were a matter for the Reserve Bank.

But in meetings with the central bank, English said he had told officials that he expected them to be thinking about the sort of conditions which would allow them to remove the LVRs.

"I would suspect that they're doing work on what conditions would have to be met to remove them, but there's no indication at the moment that they're going to."

The real estate industry is leading calls for a relaxation of the LVR rules after house sales in Auckland fell by a quarter in the last year.

Barfoot and Thompson said entry-level buyers should be exempted from the lend restrictions as long as properties were below a $600,000 threshold.

However, the Reserve Bank's Official Cash Rate statement last week reiterated its housing market concerns.

"House price inflation continues to moderate due to loan-to-value ratio restrictions, affordability constraints and a tightening in credit conditions.," the bank said.

"This moderation is expected to persist, although there remains a risk of resurgence in prices given continued strong population growth and resource constraints in the construction sector."