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Reserve Bank activates Debt-to-Income restrictions
The new DTI restrictions will create limits on the amount of high-DTI lending that banks can make (i.e. where the borrower has taken on a high amount of debt relative to their gross, or pre-tax, income). LVR restrictions limit the amount of low-deposit lending that they can make. Deputy Governor Christian Hawkesby says DTIs and LVRs are complementary. “LVRs target the impact of defaults by reducing the amount of potential losses in the event of a housing down-turn. While DTIs reduce the probability of default by targeting the ability of borrowers to continue to repay debt. Both act as guardrails reducing the ... (full story)