23 Jul 2013

PM thinks loan restrictions will go ahead

10:07 pm on 23 July 2013

Prime Minister John Key says it is his guess that the Reserve Bank will go ahead with restrictions on low deposit loans.

John Key.

John Key. Photo: RNZ

The central bank is considering whether it should restrict how much trading banks can loan to home buyers, known as the loan-to-value ratio.

Mr Key said on Tuesday he believes the Reserve Bank will go ahead with the changes, as the alternative is raising interest rates.

He said helping first-home buyers is a priority for the Government, but the housing market in Auckland can't be left unchecked.

However, Labour leader David Shearer said Mr Key must be kidding when he says first-home buyers are a priority, as introducing new loan limits would make it harder to save for a deposit.