Reserve Bank Governor Adrian Orr is concerned by mortgage debt levels in New Zealand and disappointed by a lack of internal regulation in the banking sector.
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The latest financial stability report from the Reserve Bank puts the income to debt ratio for mortgage holders at 350 percent and Mr Orr told Newshub Nation that worries him.
"Where people have five times their income leveraged in these mortgages, you're saying, 'That is just too high.'"
He says as a result the Reserve Bank has implemented loan to value restrictions (LVR) - but they should not have needed to.
"It's disappointing that we have to do that. You know? Why are banks lending at such an extreme level?"
Mr Orr says that lending by banks seems to be 'seasonally irresponsible' and potentially dangerous - with tighter regulation following a financial crisis and then a shift back to high levels of credit.
A royal commission of inquiry was recently undertaken into banking practices in Australia and Mr Orr is not ruling out recommending a similar inquiry in New Zealand.
Four of our biggest banks are owned by the Australians - ANZ, ASB, Westpac and BNZ.
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