11 Sep 2009

Brash predicts looser lending criteria by banks

7:53 am on 11 September 2009

Former Reserve Bank Governor Don Brash predicts the big banks could further relax lending criteria to property buyers.

Current Governor Alan Bollard on Thursday warned the economy's fragile recovery is at risk if people again pile up debt to buy houses.

Dr Brash, issued similar pleas in the 1990's. He now says he's worried the banks could worsen the situation by loosening the criteria for lending.

He says one solution could be to make mortgages a riskier proposition for banks.

The Reserve Bank on Thursday held the Official Cash Rate at 2.5%.

It has been reduced in a series of steps since being cut from 8.25% to 8% on 24 July 2008. The OCR was lowered to 2.5% on 30 April.