RBNZ mulls new lending controls

The Reserve Bank of New Zealand has acknowledged it is discussing the possibility of English and Irish style controls on loan to income multiples, but they remain at an early stage.

Governor Graeme Wheeler made his first comments of the year on the banking regulator's plans to use macro-prudential tools while presenting the March quarter Monetary Policy Statement.

Last week the bank proposed creating a new sub-category for rental property mortgages in its capital adequacy categories that would allow the regulator to require tougher capital for such mortgages at a later stage.

Wheeler was then asked if the bank was planning to use any new macro-prudential measures to slow the Auckland housing market, where annual inflation accelerated to 13% in January. He had said in December that the bank was not considering any more macro-prudential moves, other than the high loan-to-value ratio tool already in use.

"We haven't made any judgement or decisions on macro-prudential," he said, adding there had been discussions internally at the Reserve Bank about the sorts of loan to income multiple tools used by the Bank of England.

He then referred to the Reserve Bank's toolkit of macro-prudential measures in its memorandum of understanding with the Finance Minister, which include the potential for a counter cyclical capital buffer and a sectoral capital overlay that would allow increased risk weightings for capital requirements for housing loans.

"We talk about those as possibilities and also look at what other countries have done -- Ireland and England, but we really haven't made any decisions on this," he said.

Earlier the Reserve Bank held the Official Cash Rate as expected at 3.5 per cent and signalled interest rates were on hold until 2017 at the earliest as annual inflation was below its target band of one to three per cent.