The factors to consider include: –  The degree of moderation achieved in rates of house price inflation and credit expansion;  –  Factors that might affect the potential for a resurgence in house price inflation following the removal of the LVRs, such as the dampening effect of increased housing supply and mortgage rates, and the stimulatory effect of higher net immigration flows;  –  Any distortions or inefficiencies that become apparent as a result of the policy.
A decision to ease or remove LVR restrictions will ultimately take into account both the financial stability and price stability implications of doing so. We will be alert to the risk that the removal of LVR restrictions could produce a resurgence in house price inflation, which would potentially undermine both financial and price stability. 6.