by resilient demand, low interest rates and an historic lack of supply. 8 having announced in april 2020 that we would be removing lvr restrictions for a year, by december 2020 we produced a consultation document foreshadowing an earlier reintroduction of lvrs. lvr restrictions were reintroduced in march 2021 and tightened further for investors in may 2021, and then owner - occupiers in november 2021. lessons learnt from our experience so that is a brief history of our experience of using macro - prudential tools over a period of a little less than a decade. a key general point that i would like to leave you with is that making decisions about macroprudential settings has not been straightforward or easy in any sense. we have reviewed our lvr settings on average every six months over this period. compared to setting monetary policy every six weeks for the past 30 years, macroprudential policy in new zealand is still in its infancy ; we are still learning ; and still finding our rhythm of following a consistent, repeatable process backed by clear and transparent communication. however, there are three high - level lessons that i do think are worth sharing. _ _ _ _ _ _ _ _ _ _ _ _ 6 see rbnz press release : reserve bank to ease lvr restrictions. rbnz. govt. nz / news / 2017 / 11 / reserve - bank - to - ease - lvr - restrictions 7 see rbnz press release : reserve bank removes lvr restrictions for 12 months. rbnz. govt. nz / news / 2020 / 04 / reserve - bank - removes - lvr - restrictions - for - 12 - months 8 orr, adrian ( 2021 ) housing matters : a speech to the property council of new zealand. social licence to earn our social licence to operate, policymakers need to ensure that the public understands and supports why our policy tools are being used. this has been an ongoing work in progress. unlike other prudential policies like capital and liquidity regulation of financial institutions, lvr restrictions are highly visible to the public and directly impact the ability of households to access credit. in the case of macroprudential tools, for example, the argument is often made that borrower - based restrictions affect first - time buyers disproportionately, and can keep people out of the housing market. for the policies to be accepted, therefore, a high degree of public transparency and accountability is needed. equally, for banks responsible for

moderate due to the tightening of lvr restrictions in october 2016, a more _ _ _ _ _ _ _ _ _ _ _ _ 2 see rbnz press release : limits for high - lvr mortgage lending. 20 august, 2013 rbnz. govt. nz / news / 2013 / 08 / limits - for - high - lvr - mortgage - lending 3 see rbnz press release : reserve bank announces new lvr restrictions on auckland housing. 13 may 2015 rbnz. govt. nz / news / 2015 / 05 / news - release - for - fsr - may - 2015 4 in addition, we introduced a new class of loans for residential investors under our capital adequacy framework, with a higher risk - weight compared with owneroccupiers. as a result, banks now need to hold more capital for investor loans, reflecting their greater risk. 5 see rbnz press release : reserve bank to ease lvr restrictions. 29 november 2017 rbnz. govt. nz / news / 2017 / 11 / reserve - bank - to - ease - lvr - restrictions general firming of bank lending standards and an increase in mortgage interest rates in early 2017 ” 6. covid - 19 period ( 2020 - 2021 ) finally, in the face of the extreme uncertainty posed by the start of the covid - 19 pandemic in early 2020, we both loosened monetary policy significantly and removed restrictions on lvrs, in order to support the economy and financial system through this unprecedented period. a key reason for removing the lvr restrictions was to eliminate a potential barrier to putting in place a mortgage deferral scheme implemented in response to the pandemic, while a general concern for supporting credit flow provided an additional impetus. we decided that the policy that we would least regret through this period was to remove restrictions and have to put them back on later ; rather than the alternative of keeping conditions too tight and exacerbating a contraction in the financial system and economy. as the deputy governor at the time said, “ [ g ] iven the current uncertainty around the economic outlook, the reserve bank considers that it is unlikely that banks will weaken lending standards to high risk borrowers. the more likely risk is that banks are overly cautious with lending to credit - worthy borrowers ” 7. as it turned out, the new zealand economy was much more resilient to the impact of covid19 than had been feared. economic activity bounced back relatively quickly, as did house prices supported