More incentive to borrow? Not what the market needs, you might say.
House prices have been the national talking point for years now. The Government is grappling with how to increase supply.
It seems counterintuitive to give a demand boost before any real results of the supply work have been seen.
But the RBNZ says it is okay - this is not more fuel for the fire -- because its new LVR tweaks will keep the lid on.
From October, Auckland investors will have to have 30 per cent deposit to buy properties.
Sure, this may slow some a little, but most established investors will have equity to spare given the price appreciation of recent years.
The rules might slow the newbies but they won't bother the pros.
But let's look at the positives of the OCR cut. The regions are especially vulnerable to a slump in the dairy sector and cuts to interest rates will keep consumers and businesses borrowing and may make cashflow easier for many.
Another cut is being predicted, which will bring the dollar down further. That is good news for exporters. Not so good if, like me, you are planning an overseas trip.
The RBNZ is in the unenviable position of being forced to upset one segment of the population, whatever it does.
It is good to see it has faith in the new tools available to it to manage the housing market - let's hope its gamble pays off.
Jeremy Tauri is an associate at Plus Chartered Accountants.
