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RBNZ claims macroprudential victory
Topic Started: 24 Oct 2014, 03:23 PM (3,067 Views)
Lef-tee
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peter fraser
25 Oct 2014, 08:47 AM
Yes possibly it was done to appease the critics. Some applauded it but didn't understand it.

NZ locked out the FTB's and gave the market to investors who had equity. I know that some think that may have saved some FTB's from paying too much, but in any market there are people getting good deals and others paying too much. We don't have MP controls on vehicle finance which incidentally is more than 100% of the actual value of the car in the showroom and about 200% of the value in the instant that it's driven onto the ramp that goes out the door and onto the road.

Surely the BRA and the RBNZ would rather leave individual decisions to individuals, which is where they belong. We have enough Nanny State policies to employ enough Nannies already.
True.

Although my point - which Shadow tried to obfuscate - about Mercedes is that unlike housing, there is no speculative market in cars in general. The price of good, reliable cars that do the job does not get bid up, up and away in pursuit of capital gains.
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Huh
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Lef-tee
26 Oct 2014, 06:27 AM
unlike housing, there is no speculative market in cars in general
Then why compare them in the first place if they're not comparable, you brought up the analogy between cars and houses, but now when you realise the analogy was silly you blame shadow for responding to you on it!
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Lef-tee
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Huh
26 Oct 2014, 07:58 PM
Then why compare them in the first place if they're not comparable, you brought up the analogy between cars and houses, but now when you realise the analogy was silly you blame shadow for responding to you on it!
I can see why your name is "Huh" - you're a bit slow to catch on. Go back and read the post for the first time.
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Huh
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Lef-tee
27 Oct 2014, 06:48 AM
I can see why your name is "Huh" - you're a bit slow to catch on. Go back and read the post for the first time.
I see you prefer to abuse me instead of addressing my point.
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A Lurker
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RBNZ to begin phasing out macro prudential restrictions.

New Zealand's central bank year-old contentious limits on risky house lending are expected to be gradually phased out in the coming year as tame inflation and a slower housing market have reduced the need for them.
For the past year retail banks have been restricted to no more than 10 percent of new home loans for borrowers with deposits of less than 20 percent of a property's value - called high loan-to-value ratio lending (LVR).
The Reserve Bank of New Zealand (RBNZ) reached for the macro-prudential tool to help cool a hot housing market, by slowing housing-credit growth and inflation without having to resort to the blunt weapon of raising rates, which may have stoked an already elevated currency.
Before the rules, low-deposit lending accounted for 25 per cent of banks' home loans, but in September that was 7.3 per cent, and RBNZ governor Graeme Wheeler said they had helped ease inflation and housing market pressures.
"This reduction allowed us to delay the tightening in interest rates, thereby reducing the incentive for any additional capital inflows into the New Zealand dollar in search of higher yields," he told a Bank of International Settlements conference last month.
Annual house price inflation has fallen to about 6 percent from 10 percent a year ago, and Mr Wheeler said the limits were worth 25 to 50 basis points of rises in the cash rate.
The RBNZ will outline the future of the LVR regime in its Nov 12 financial stability report, but they are seen to have largely done what was expected of them.
"It's been very effective, it's worked well and achieved what the bank wanted, but it's served its purpose," said ANZ Bank chief economist Cameron Bagrie.
The British and Australian central banks are currently facing strong house price growth and looking for measures to cool markets.
The Reserve Bank of Australia has concerns about banks' lending practices and an unbalanced housing market, but in August, RBA Governor Glenn Stevens called macro-prudential tools the "latest fad".
Australian financial sector regulator APRA instead may require banks to hold more capital for low or no deposit loans.
New Zealand's limits have been blamed for a sharp fall in house sales, down more than 10 percent on a year ago, as well as knocking many first home buyers out of the market.
For the real estate industry the LVR restrictions can't go quick enough.
"They were too heavy handed, have hurt provincial areas, and made it more difficult for first home buyers to enter the market," said Hayden Duncan chief executive of the country's biggest real estate company Harcourts.
The effectiveness of the LVR limits was blurred when the RBNZ resumed orthodox monetary policy by raising its benchmark cash rate a total of 100 basis points to 3.5 per cent between March and July before pausing in September on the back of soft inflation pressures.
The RBNZ has always said the LVR limits are temporary and will go when it sees little risk of the housing market getting a second wind from banks returning to their old lending habits, especially if the demand is stoked by immigration gains, which hit a record in the year to September.
One analyst sees value in keeping some lending limits, especially when monetary policy is on hold again.
"They won't want the high LVR share to zoom back to 30 per cent again otherwise it will require another hard clamp down," said Westpac senior economist Michael Gordon, suggesting the limit could be raised to 15 or 20 per cent of lending.


Read more: http://www.smh.com.au/business/world-business/rbnz-set-to-phase-out-marcoprudential-home-loan-limits-20141110-11juvx.html#ixzz3IdgqFNF1
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Emmanuel
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A Lurker
10 Nov 2014, 04:07 PM
RBNZ to begin phasing out macro prudential restrictions.

New Zealand's central bank year-old contentious limits on risky house lending are expected to be gradually phased out in the coming year as tame inflation and a slower housing market have reduced the need for them.
For the past year retail banks have been restricted to no more than 10 percent of new home loans for borrowers with deposits of less than 20 percent of a property's value - called high loan-to-value ratio lending (LVR).
The Reserve Bank of New Zealand (RBNZ) reached for the macro-prudential tool to help cool a hot housing market, by slowing housing-credit growth and inflation without having to resort to the blunt weapon of raising rates, which may have stoked an already elevated currency.
Before the rules, low-deposit lending accounted for 25 per cent of banks' home loans, but in September that was 7.3 per cent, and RBNZ governor Graeme Wheeler said they had helped ease inflation and housing market pressures.
"This reduction allowed us to delay the tightening in interest rates, thereby reducing the incentive for any additional capital inflows into the New Zealand dollar in search of higher yields," he told a Bank of International Settlements conference last month.
Annual house price inflation has fallen to about 6 percent from 10 percent a year ago, and Mr Wheeler said the limits were worth 25 to 50 basis points of rises in the cash rate.
The RBNZ will outline the future of the LVR regime in its Nov 12 financial stability report, but they are seen to have largely done what was expected of them.
"It's been very effective, it's worked well and achieved what the bank wanted, but it's served its purpose," said ANZ Bank chief economist Cameron Bagrie.
The British and Australian central banks are currently facing strong house price growth and looking for measures to cool markets.
The Reserve Bank of Australia has concerns about banks' lending practices and an unbalanced housing market, but in August, RBA Governor Glenn Stevens called macro-prudential tools the "latest fad".
Australian financial sector regulator APRA instead may require banks to hold more capital for low or no deposit loans.
New Zealand's limits have been blamed for a sharp fall in house sales, down more than 10 percent on a year ago, as well as knocking many first home buyers out of the market.
For the real estate industry the LVR restrictions can't go quick enough.
"They were too heavy handed, have hurt provincial areas, and made it more difficult for first home buyers to enter the market," said Hayden Duncan chief executive of the country's biggest real estate company Harcourts.
The effectiveness of the LVR limits was blurred when the RBNZ resumed orthodox monetary policy by raising its benchmark cash rate a total of 100 basis points to 3.5 per cent between March and July before pausing in September on the back of soft inflation pressures.
The RBNZ has always said the LVR limits are temporary and will go when it sees little risk of the housing market getting a second wind from banks returning to their old lending habits, especially if the demand is stoked by immigration gains, which hit a record in the year to September.
One analyst sees value in keeping some lending limits, especially when monetary policy is on hold again.
"They won't want the high LVR share to zoom back to 30 per cent again otherwise it will require another hard clamp down," said Westpac senior economist Michael Gordon, suggesting the limit could be raised to 15 or 20 per cent of lending.


Read more: http://www.smh.com.au/business/world-business/rbnz-set-to-phase-out-marcoprudential-home-loan-limits-20141110-11juvx.html#ixzz3IdgqFNF1
I think that Australia's mojo has drifted across the Tasman to some degree. As long as they meddle in a positive way, they will do themselves some favors. But as Pedro Fraser says, they farked it up. They didn't pay attention or observe intently enough. It was a kneejerk reaction.
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peter fraser
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A Lurker
10 Nov 2014, 04:07 PM
Ah well, it was bright, it was shiny, and it was a new toy.

The Kiwis bought it, played with it for a while, and now it's being shoved in the box with all the old toys.

What's next?
Any expressed market opinion is my own and is not to be taken as financial advice
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Emmanuel
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peter fraser
10 Nov 2014, 05:01 PM
Ah well, it was bright, it was shiny, and it was a new toy.

The Kiwis bought it, played with it for a while, and now it's being shoved in the box with all the old toys.

What's next?
Well expressed. They know that they cannot stop the will of the people. What they should have been doing is supporting the people.

I think the answer to what's next is that they will admit their failures and follow their brethren across the Tasman.
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Admin
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NZ median house price hits record high

Auckland House Prices Booming
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peter fraser
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Quote:
 
Million-dollar homes are pushing up the median house price, according to the Real Estate Institute.

Its November house data shows median house prices hit a new high of $455,750, up 6 per cent on the previous month and 7.2 per cent higher than a year ago.

But the most noticeable trend was the big rise in house sales, up 12.2 per cent on the previous month and 6.5 per cent on a year ago.


http://www.stuff.co.nz/business/money/64003885/house-sales-rise-across-much-of-nz-reinz
Any expressed market opinion is my own and is not to be taken as financial advice
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