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Market Update

EncoreFX’s daily market updates are written by our experienced and professional dealing team.

RBNZ Ease Mortgage Lending Restrictions

Published November 28, 2018

The NZD has strengthened overnight following a fall in the US consumer confidence report and post the RBNZ financial stability report loosening the loan-to-value ratio.

The Reserve Bank Eases Home Loan-To-Value Lending Restrictions

Good news for home buyers, the RBNZ has announced in this morning’s Financial Stability Report they will be easing loan-to-value lending ratio restrictions at the start of next year as growth in the previously red-hot housing market has eased off.

Key points from the announcement:

• Up to 20% (up from previous 15%) of new mortgages to owner-occupiers can have deposits of less than 20%.
• Up to 5% of new mortgages to property investors can have deposits of less than 30% (lowered from 35%)
• Households remain exposed to financial shocks due to their large mortgage debt burden
• If banks’ lending standards are maintained we expect to further ease LVR restrictions over the next few years.

This move demonstrates that the RBNZ is less concerned about house price inflation than it has been previously, and this may impact their inflation expectations in upcoming monetary policy decisions.

Later this morning RBNZ Governor Adrian Orr will address the media at 11am

Trade Tensions Simmer

President Donald Trump has told media it was highly unlikely he won’t increase tariffs further on Chinese goods, saying if he can’t reach a deal an additional USD267 billion will be imposed. The statement comes ahead of the anticipated G20 summit in Buenos Aires this weekend where Trump will meet his equal Xi Jinping to discuss trade.

US Consumer Confidence

The USD fell overnight on US confidence falling further than expected in November. The report showed the index decreased to 135.7 vs expectations of 136.5.