This will provide banks with more scope to manage the existing pipeline of pre-approved lending. Based on our experience with the existing LVR speed limit, it is expected that the actual flow of high LVR lending to Auckland investors will settle well below 5 percent as banks adopt a buffer to ensure compliance.
Third, in light of feedback from the consultation, we have decided to introduce a new exemption category for lending for significant remedial construction work, such as for houses with weather tightness issues or requiring seismic strengthening. It would be undesirable to prevent banks from providing this lending, from both a financial stability and a broader efficiency perspective.