The Reserve Bank of New Zealand has relaxed its loan to value ratios in its Financial Stability Report released this morning.The RBNZ said New Zealand's financial system remains sound and risks to the system have reduced over the past six months. "Over the past six months, pressures in the housing market have continued to moderate due to the tightening of LVR restrictions in October 2016, a more general firming of bank lending standards and an increase in mortgage interest rates in early 2017," it said, adding that housing market policies announced by the new Labour Government were also expected to have a "dampening effect" on the housing market. "In light of these developments, the Reserve Bank is undertaking a modest easing of the LVR restrictions. From 1 January 2018, the LVR restrictions will require that:•    no more than 15 percent (currently 10 percent) of each bank's new mortgage lending to owner occupiers can be at LVRs of more than 80 percent; and•    no more than 5 percent of each bank's new mortgage lending to residential property investors can be at LVRs of more than 65 percent (currently 60 percent). "The Bank will monitor the impact of these changes and will only make further LVR adjustments if financial stability risks remain contained. A cautious approach will reduce the risk of resurgence in the housing market or deterioration in lending standards," the RBNZ said. New kiwi Finance Minister Grant Robertson told reporters in parliament yesterday that the Labour party had always been concerned about the impact of LVRs on first-home buyers. He also said he had never favoured debt to income ratios. The Reserve Bank initially imposed restrictions on LVRs across the board in 2013, meaning rental property investors, people moving from one home to another and first home buyers were all subject to a tight speed limit on the proportion of lending done with LVRs of over 80 percent. In 2015 the Reserve Bank limited lending to rental property investors in Auckland at LVRs above 70 percent, but left the across-the-board restriction in place elsewhere. That led to complaints in the first three years of the policy that first home buyers were hit with the same blunt instrument and were left at a disadvantage because rental property investors invariably had much more equity to 'spend' because of property price inflation for previous properties they had owned. But in 2016 the Reserve Bank applied a restriction that no more than five percent of lending to rental property investors across the country would be able to be done with LVRs of more than 60 percent. That effectively restricted rental property investors more than first home buyers and existing home movers, redressing the imbalance somewhat.