09-06-2017

Reserve Bank publishes consultation on debt to income (DTI) limits

The Reserve Bank today published a consultation paper seeking feedback on serviceability restrictions such as debt to income (DTI) limits being added to its macro prudential toolkit.

The Bank is seeking feedback from stakeholders on:

• the risks posed by high DTI lending and the potential for a DTI limit or similar policy to ameliorate these risks;
• alternative policies under the Reserve Bank’s control and how they would compare to a DTI limit; and
• desirable design features for any DTI policy and the potential costs and benefits.

The consultation paper outlines the Reserve Bank’s view on these issues. The paper states that the Bank would not implement a DTI policy in current market conditions, but that the Bank considers that DTI limits could be a useful option in the future.

The consultation paper includes a cost-benefit analysis for a DTI policy and finds there could be significant net benefits.

Feedback should be provided to the Reserve Bank by 18 August 2017.

More information

Consultation paper: Serviceability restrictions as a potential macroprudential tool in New Zealand (PDF 1.3MB)

Tags: reserve bank - debt to income limits