Categories where there is a clear case to exempt include Housing New Zealand mortgageinsured loans, bridging loans, refinancing loans and high-LVR loans to borrowers who are moving home (but not increasing their LVR or loan amount). Unintended consequences While we believe that LVR restrictions could have significant benefits in terms of reducing systemic risk in the housing market, they are not a panacea.
If we can go back to the domino theory – We are dealing with a similar situation in financial markets. Triggers for the domino effect, latent in normal times become potentially destructive during crisis. The challenge is to search for the possible triggers which can initiate a damaging chain reaction. 4  BIS central bankers’ speeches  Communication challenges and financial stability 23.