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Enhancing the efficiency of macroprudential policy: activating DTIs and loosening LVRs

We consulted on activating debt to income (DTI) restrictions and loosening loan to value ratios (LVR) for residential lending.

About the consultation

In early 2024, we consulted on proposed changes to how we implement our macroprudential policies: to activate debt-to-income (DTI) restrictions on residential mortgage lending, alongside easing existing loan-to-value ratio (LVR) restrictions.

Consultation outcomes

We have decided to implement the following changes to DTI and LVR settings, with effect from 1 July 2024. These changes will apply to banks’ new residential mortgage lending from that date.

DTI restrictions will be activated, allowing banks to lend:

  • 20% of owner-occupier lending to borrowers with a DTI ratio greater than 6
  • 20% of investor loans to investors with a DTI ratio greater than 7

LVR settings will be eased, allowing banks to lend:

  • 20% of owner-occupier lending to borrowers with an LVR greater than 80%
  • 5% of investor lending to borrowers with an LVR greater than 70%

We will consult with banks on amendments to their conditions of registration, to implement these changes.

Submissions and our response

The consultation closed on 12 March 2024. We received 28 submissions. Find the original consultation paper, submissions, and our response below.

Enhancing the efficiency of macroprudential policy: activating DTIs and loosening LVRs consultation paper (PDF, 1MB) 

Summary of submissions (PDF, 874KB)

Submissions (PDF, 5MB)

Regulatory Impact Statement (PDF, 1MB)

Consultation history

We first publicly consulted on the potential use of debt serviceability restrictions (DSRs) as a macroprudential tool in 2017. We then consulted on the merits and design of potential DSRs, including DTI restrictions, in late 2021.

In late 2022, we publicly consulted on the framework for DTI restrictions. After incorporating feedback from stakeholders, we published our policy document BS20: Framework for Restrictions on High Debt-To-Income Residential Mortgage Lending in April 2023. Finally, we consulted on the activation of DTI restrictions in accordance with the policy framework, alongside the easing of LVR restrictions, in early 2024.

Find previous consultation documents below.

Serviceability restrictions as a potential macroprudential tool in New Zealand (2017)

This consultation page contains material for our initial 2017 consultation on debt serviceability restrictions.

Debt serviceability restrictions (2022)

This consultation page contains material for:

  • 2021 Debt Serviceability Restriction consultation materials.
  • 2022 Framework for Debt-to-Income Restrictions – Design Elements and Exposure Draft consultation materials.
  • 2023 Framework for Debt-to-Income Restrictions – Regulatory Impact Assessment.