RBNZ Governor Adrian Orr said the New Zealand economy has been “relatively resilient” to the economic shock from the pandemic so far. The financial system “has not been tested as severely as it could have been”. However, he warned, “businesses domestically and internationally face ongoing challenges as fiscal support measures unwind, which will lead to an increase in loan impairments for banks.”
On the topic of house prices, Deputy Governor Geoff Bascand said, “high leverage in the housing sector poses risks if house prices fall sharply or unemployment rises, reducing the ability to service loans”. Hence, RBNZ “intends to re-impose LVR restrictions to guard against continued growth in high-risk lending and ensure that banks remain resilient to a future housing market downturn.”
