The Reserve Bank of New Zealand has welcomed ANZ's decision in the last week to tighten its lending criteria for rental property investors borrowing through mortgage brokers. The move by New Zealand's largest bank and its fastest growing bank in Auckland will help the Reserve Bank slow lending growth from eight year highs and address what the bank regulator and central bank sees as growing financial stability risks in Auckland. ANZ told mortgage brokers on Friday it had tightened its lending criteria for rental property investors and owner-occupier borrowers by reducing its Loan To Value Ratio limits, and by stopping lending to investors wanting to buy sections and apartments off the plan.The move, which may slow development of new rental properties, follows news that bank mortgage lending growth rose to an annual rate of 8.3 per cent in April, which was the fastest growth rate since mid 2008 and four times faster than wage growth. "We are making these changes to ensure that ANZ is appropriately positioned in the current housing environment, taking into account supply pressure in certain areas and ensuring we continue to support New Zealander's financial interests," ANZ's head of mortgage adviser distribution Baden Martin said in a memo to brokers.ANZ said it had reduced the maximum LVR for owner-occupier borrowers in Auckland to 85 per cent from 90 per cent and had reduced the maximum LVR outside Auckland to 90 per cent from 95 per cent.It also said it had removed the combined collateral exemption for rental property investors in Auckland, which meant the maximum for new lending to Auckland investors would now be 70 per cent of the value of the property.Previously, ANZ had allowed investors to spread their equity across their portfolio to ensure their combined loan to value ratio was under the Reserve Bank's limit for Auckland investors of 70 per cent, which was applied from November last year. This meant some new loans were for LVRs over 70 per cent, but were under 70 per cent when considered right across an investor's portfolio.It said pre-approvals for lending over 80 per cent would now only be available to existing ANZ customers with three months of bank statements, while new customers could only apply if they had a signed sale and purchase agreement.ANZ also reduced the maximum LVR for lending that was exempt from the Reserve Bank's LVR rules (new builds and refinancing) from 95 per cent to 90 per cent.RBNZ deputy governor Grant Spencer took the unusual step on Thursday of singling out the policy change by an individual bank for praise. The RBNZ is struggling to deal with record low consumer price inflation and falling interest rates at the same time as double-digit house price inflation in Auckland, where price to income multiples are now over nine."I would say we are encouraged by ANZ's announcement last Friday that they were tightening up their standards around housing and recognising the risk that is inherent in the housing system at present," Spencer told a