ANZ New Zealand, which is New Zealand's largest bank with the biggest exposure to the Auckland housing market, has warned the city's housing market is "over-cooked" and it is being much more cautious about lending to investors.Chief executive David Hisco wrote an article in the New Zealand Herald and appeared on television and radio to comment on the housing market, calling on the Reserve Bank of New Zealand to tighten lending restrictions to investors even more than it announced earlier this week. Hisco pointed to softness in the Australian economy and storm clouds on the economic horizon as potential concerns for the New Zealand economy, which he said was suffering because of an over-valued currency."One thing is certain, if employers start laying off staff because exports to an uncertain world are dropping, those people won't be able to afford their mortgages and when that happens they will sell their houses. If unemployment rises and the dollar drops, overseas investors will cash in their chips and sell, most probably in a stampede," he said."The Baby Boomers who have become property investors in recent years based on shallow deposits will soon realise what I'm already seeing - more and more rental properties where owners either can't find a tenant, or the rent can't cover the mortgage. Salaries and wages have hardly changed whilst house prices have risen - this can't continue so it's a matter of when, not if, the market adjusts."Hisco said New Zealand had come out of the financial crisis well "but logic tells me things cannot continue to run this hot.""Eventually, landlords will realise that getting a measly yield is not worth it, nor is leaving a property empty, and they will try to sell and take any possible capital gain. Nobody knows where the top of the market is but, as they say, nobody ever went broke taking a profit," he said.Hisco then called on the RBNZ to further tighten its loan-to-valuation ratio limit for investors from 60 per cent to 40 per cent. That would mean investors would need a 60 per cent deposit."Almost half of house sales in Auckland are to property investors. Taking them out of the market will be unpopular amongst investors but it may end up doing them a favour," Hisco said."Of course this would mean less business for us banks but right now the solution calls for everyone to adjust," he said, adding ANZ would itself implement even tougher criteria for investment loans as house price inflation spreads from Auckland to other regions.ANZ announced on June 4 it had reduced its LVR levels for rental property investors and would stop lending to investors buying bare land or apartments off the plan.