The outlook for macroprudential policy We left the LVR policy unchanged in the May Financial Stability Report, in order to monitor the effect of our recent easing and the recent fall in mortgage rates. Looking ahead, we are comfortable with further easing in the LVR policy over time, but this is predicated on risks continuing to abate.
Specifically, we want to see household debt levels remaining stable relative to incomes, prudent lending standards from banks, and moderate house price inflation. If these conditions are met, we are inclined to continue easing the restrictions. In the long term, we face a choice between removing the LVR restrictions and maintaining a permissive setting.