(Adds detail, background)
* RBNZ lending limits worth up to 50 bps of rate rises
* Lending limits eased pressure on NZ dollar
WELLINGTON, March 27 New Zealand limits on low
deposit, high risk home loans have been effective in reducing
overall inflation pressures, taking some of the heat off the
central bank to raise official interest rates, a central bank
official said on Thursday.
The Reserve Bank of New Zealand earlier this month raised
its official cash rate (OCR) by 25 basis points to 2.75 percent,
and Deputy Governor Grant Spencer said the lending limits are
easing inflation pressures.
"The dampening effect of (loan-to-value ratios) on house
price inflation is estimated to have reduced CPI inflation
pressures by an amount equivalent to a 25-50 basis point
increase in the OCR," he said in speech notes to a Hong Kong
"In this respect, the LVR restrictions may have reduced
current pressures on the NZD exchange rate."
The RBNZ imposed a 10 percent limit on banks' low
deposit-high value lending to customers with less than a 20
percent deposit for a house last October.
The measures are aimed at cooling the housing market, which
has been at record levels, and reduce risk to the financial
system from a potentially sharp downturn.
Latest figures from the RBNZ showed high LVR lending, after
exemptions, had fallen to 4.2 percent of banks' total mortgage
lending in February from about 25 percent before the
Spencer said the lending limits were not intended to be
permanent, and with the RBNZ having started to raise rates, they
could be eased or eventually removed.
For the full speech, go to here
(Reporting by Gyles Beckford; Editing by Jacqueline Wong)