23 Dec 2013

Reserve Bank calls for more consultation

7:15 am on 23 December 2013

The Reserve Bank is calling for more consultation over its exemption for residential construction loans from its restrictions on lending to people with small deposits.

The central bank says although borrowers with less than a 20% deposit make up only a small portion of the new-build market, the exemption should support the building of new houses and help to moderate house price inflation.

The restrictions were introduced in October because the Reserve Bank was worried the escalating growth in lending to people with less than a 20% deposit would put banks at risk should house prices fall.

Submissions on the exemption close on 14 February.