we think that it is important to consider and explain the neutral macroprudential settings. that way we will not only be able to express whether we think current macroprudential settings are expansionary or contractionary at any time, but also provide a clearer path ahead into the long - term to their neutral settings. again, to use the analogy with monetary policy, much like how we publish a projection for the official cash rate ( ocr ), we should aspire to be able to publish a projection of our macroprudential settings, and to explain how these will assist us achieve our mandate for a stable and efficient financial system. with potentially more macroprudential tools available as part of a full suite, we will also need to consider and explain how they combine in total to a neutral long - term setting to support financial stability through the cycle. all of these considerations are part of the building blocks we need to put macroprudential policy on an equal analytical footing with monetary policy, and to find the rhythm of following a consistent, repeatable process backed by clear and transparent communication. _ _ _ _ _ _ _ _ _ _ _ _ reserve bank summary of submissions : debt serviceability restrictions : https : / / www. rbnz. govt. nz / - / media / reservebank / files / publications / policydevelopment / banks / debt - serviceability - restrictions / dsr - consultation - summary - of - submissions. pdf conclusion so to sum up the new zealand experience, we have evolved and developed our thinking on macroprudential policy tools. our experience has informed us that macroprudential tools are an important part of delivering on our responsibility for the stability of the financial system as a whole, alongside other prudential settings. we have shifted our lvr restrictions through time, applying different setting for regions and types of borrowers, and adjusted our settings in response to the changing threats to financial stability. over time we have evolved our thinking from considering lvr restrictions on mortgage lending to be a temporary tool for managing ups and downs in the financial cycle to seeing them to be a more permanent device to maintain the resilience of the financial system. we have also come to see that it is important to have a fuller suite of macroprudential tools, which help manage both the risks to the financial system from a fall in house prices and the risks to households being unable to service their debt. aligning with our memorandum of understanding with the

a paid 11 - week summer internship to pasifika tertiary students and recent graduates. page 6 of 9 housing, lvrs and the reserve bank ’ s role while we are proud of what we have accomplished in the past financial year, there is more to do and we are still doing the hard yards to ensure the wellbeing of all new zealanders. we recognise that housing affordability is an important issue for new zealand – as a nation, but also for many people on a personal level. at the height of the covid - 19 pandemic, one of the levers we have used to help maintain credit flows and to support the mortgage deferral scheme was to remove loan - to - value ratio ( lvr ) restrictions. lvr restrictions are used to put a limit into banks ’ mortgage lending to borrowers that are highly - leveraged. we removed lvr restrictions so as they didn ’ t impede covid - 19 responses and policies to promote cashflow and confidence in the system. since then, the domestic economy has seen a strong recovery, the housing market has proved resilient, and high - lvr lending has been increasing. we are concerned about the risk of sharp correction in the housing market and the harm this could do. if continued, this could lead to emerging risks to financial stability. and so in december last year, we launched a public consultation proposing to reinstate lvr restrictions. yesterday we announced our decision to put in place firmer lvr restrictions to reduce the risks to financial stability caused by higher - risk mortgage lending. from 1 march 2021, lvr restrictions will be reinstated at the same level they were set at prior to the onset of covid - 19, with a further tightening of restrictions taking effect on 1 may 2021. we ’ ve also made it clear we expect banks to respect the tighter investor restrictions immediately with all new loan approvals, to ensure that their mortgage lending is consistent with our policy decision. while a broader set of policy measures is needed to address long - term imbalances in the housing market, the reserve bank is acting on its mandate to control financial stability risks resulting from excessive high risk borrowing. as you are aware, last year, we received a letter from the minister of finance seeking our views on ways we can work together to address rising house prices. we have since provided detailed feedback on the comments raised by the minister in his letter. page 7 of 9 this is an important topic for all new