The RBNZ today announced that debt serviceability restrictions are being added to the policy toolkit. The RBNZ and the Minister of Finance have agreed to update their shared Memorandum of Understanding on “macroprudential policy”. This is basically the policy that supports the stability of our financial system as a whole, to prevent substantial disruptions to financial services necessary for a stable economy.
The RBNZ has looked at various ways of supporting financial stability and house price sustainability. Their analysis finds that debt serviceability restrictions such as debt-to-income (DTI) limits are likely to be the most effective additional tool to be deployed by the Reserve Bank to support those aims. The Minister of Finance has agreed in principle to adding debt serviceability restrictions to the MoU on the condition that the implementation is designed to avoid impact on first home buyers (as much as is possible).
The RBNZ and Minister of Finance will be discussing in the coming months the various options for implementing a DTI limit. Any decisions will be preceded by a public consultation process.
Here are Building on Basics we are all about making sure that your financial situation is sustainable for you, and making sure that your debt to income ratio is healthy is definitely a part of that.
Read the RBNZ announcement here: