This is the alternative to a DTI ratio tool suggested by bank lobby group the New Zealand Bankers’ Association in its response to the 2017 consultation. NZBA argued the evidence linking high-DTI loans and loan defaults was weak, with job loss having the most significant impact on the likelihood of loan default.
RBNZ finally gets conditional agreement from the Finance Minister for debt serviceability tools, but the initial one it’s able to use is likely to be one pushed by the bank lobby group
June 17, 2021