August 4, 2017 / 4:45 AM / a year ago

Moody's says no need for more New Zealand housing loans curbs currently

WELLINGTON, Aug 4 (Reuters) - New Zealand does not need to adopt further restrictions on housing loans at present given the recent cooling in its property market, a Moody’s Investors Service analyst said on Friday.

Daniel Yu, senior analyst of financial institutions, said high household indebtedness and house prices remained the main risk for New Zealand’s banks, but that he expected the recent moderation in house prices to persist.

The central bank has been calling for debt-to-income restrictions (DTI) to be added to its toolkit and is seeking feedback from stakeholders until Aug. 18.

“The moderation in house price growth is probably going to be a little bit more long-lasting than what we’ve seen in the past,” Yu said.

“At this stage I don’t think there is any need for the government to implement DTI (restrictions) but I have no doubt that if we did start to see the market rebound again, that it is something they would implement.”

House prices were growing at double-digit rates at the start of the year, particularly in the commercial capital Auckland, but have cooled as limits on loan-to-value loans that the central bank ramped up last year began curbing investment activity.

Data released on Wednesday showed house prices growing at the slowest annual pace in 2.5 years, at 6.4 percent.

The central bank has said it would not currently use DTI restrictions even if they were a part of its arsenal but has also expressed concern about any resurgence in house prices in recent months.

New Zealand is rated Aaa with a stable outlook by Moody’s. (Reporting by Ana Nicolaci da Costa; Editing by Richard Borsuk)

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