The Reserve Bank has given the first indication it is considering easing or removing restrictions on low-deposit mortgages.
But it said this would only happen once house prices rises cooled down.
The low loan-to-value ratio (LVR) restrictions were introduced in October to try and slow house-price rises, but the central bank is now reconsidering as rising interest rates begin to quell house-price inflation.
"We have stated that the LVR restrictions are not intended to be permanent," the bank's deputy governor Grant Spencer said late yesterday.
"They will be removed once housing market pressures have moderated and when we are confident there will not be a resurgence of house-price inflation in their absence," he said.
Spencer, who was speaking at an investment conference in Hong Kong yesterday, said the LVR "speed limit" was aimed at dampening the rapid growth in house prices and strengthening households' and banks' balance sheets.
According to Reserve Bank estimates the dampening effect of LVRs on house prices had reduced inflationary pressures by an amount equivalent to a 0.25 per cent to 0.5 per cent rise in interest rates.
Spencer said that the monetary policy tightening cycle that had now started was motivated by the need to maintain inflation at around 2 per cent. Rising interest rates should contribute to financial stability by further dampening house-price inflation, he said.
"In this regard, as interest rates move back to more normal levels, we will expect to have greater scope to ease or remove the LVR restrictions," Spencer said.
- Fairfax Media