If the RBA’s right, interest rates may not fall for another year. Here’s why. 
Will the RBA raise rates again? Unless prices surge over summer, it's looking less likely 
FxWirePro: Daily Commodity Tracker - 21st March, 2022 
Governments have been able to overrule the Reserve Bank for 80 years. Why stop now? 
The RBA has kept interest rates on hold. Here's why it'll be cautious from here on 
Why central banks should stop raising interest rates 
The Reserve Bank of New Zealand has tightened the loan-to-value restrictions (LVR) for residential lending during a decision undertaken in July, which is likely to be effective from September 1, 2016.
The central bank had earlier indicated that the LVR restrictions could be tightened before the end of the year; but in light of the ongoing strength in the real estate market, the RBNZ’s decision for an early introduction did not pose any surprise element for market participants.
A nationwide speed limit on investor lending has been capped at 60 percent LVR. Previously the investor limit was only applied to Auckland and was set at 70 percent. Moreover, a tightening of the nationwide speed limit for owner-occupied lending, with no more than 10 percent of new lending permitted to have an LVR greater than 80 percent. In May last year this limit had been loosened to 15 percent of new lending (except for Auckland, where it remained at 10 percent), Westpac reported.
The impact of LVR restrictions worldwide has been mixed. On a general note, LVRs are likely to dampen house price and credit growth, with the peak occurring within the first six months. However, their long-term impact on the level of house prices remains unclear.
With new steps under way to deal with booming house prices, the market now sees a greater chance of interest rate cuts by the RBNZ. The NZ dollar fell half a cent and the two-year swap rate fell by 4 basis points after the announcement, the report added.
"We were already firmly of the view that the RBNZ would cut the OCR again at the 11 August Monetary Policy Statement. Today’s announcement on LVRs and the hastily scheduled economic update on Thursday, only reinforce our view," Westpac commented in its research note.
Meanwhile, under the existing policy framework, the central bank of New Zealand expects house price inflation and credit growth to hover around 2-5 percentage points lower than the usual. The impact is however, expected to be greater for Auckland, given that the lending restrictions were already tighter in Auckland.
