Loan-to-value restrictions: the current bank speed limits
The Reserve Bank limits the share of high-LVR mortgage lending banks can make, with separate settings for owner-occupiers and investors.
On this page
- Owner-occupier allowance
- 25% of new loans above 80% LVRReserve Bank, LVR restrictions explained
- Investor allowance
- 10% of new loans above 70% LVRReserve Bank, LVR restrictions explained
- Current settings began
- 1 December 2025Reserve Bank, LVR policy timeline
- Latest annual review
- Settings maintained in August 2026Reserve Bank, LVR policy timeline
What LVR measures
Loan-to-value ratio compares the amount borrowed with the value of the property. The Reserve Bank describes it as the loan divided by the house value. A larger deposit means a lower ratio. LVR measures the security position behind a mortgage, rather than the borrower’s income, ongoing living costs or ability to meet each repayment. Those are different questions in a lending assessment. Reserve Bank, LVR restrictions explained (opens in a new tab).
The settings and their start date
The current settings took effect on 1 December 2025. The Reserve Bank’s timeline records an owner-occupier allowance of 25% of new lending above 80% LVR and an investor allowance of 10% above 70% LVR. Its August 2026 entry records that the Financial Policy Committee maintained these settings in its annual macroprudential review. The date identifies the policy setting, rather than a particular borrower’s loan approval. Reserve Bank, LVR policy timeline (opens in a new tab).
A speed limit applies to the bank
The allowance is a cap on the share of high-LVR lending a bank can provide over its regulatory lending period. It is not a promise that a particular application will fall within that share. The Reserve Bank imposes these restrictions to limit low-deposit lending and reduce financial stability risks. A bank exceeding its speed limit can breach its conditions of registration and face supervisory action. Reserve Bank, bank LVR requirements (opens in a new tab).
Exemptions and lender discretion
The Reserve Bank lists exemptions for qualifying Kāinga Ora loans, refinancing without increased borrowing, loan portability, bridging finance, remediation and construction lending. Each category has conditions; a description such as refinancing does not by itself establish an exemption. Banks use their own lending criteria and can cap a loan even where the regulatory LVR requirements are met. DTI restrictions also apply to residential lending and measure a different relationship. Reserve Bank, LVR restrictions explained (opens in a new tab).
What a repayment scenario leaves out
The mortgage repayment calculator models repayments from an entered balance, interest rate and term. It does not determine the property valuation a bank will accept, allocate the bank’s high-LVR allowance or confirm an exemption. It does not make a credit decision. This explainer is general information about the published framework and does not assess a borrower’s eligibility, deposit requirements or lending offer.