In this regard, as interest rates move back to more normal levels, we will expect to have greater scope to ease or remove the LVR restrictions. The Reserve Bank stated from the outset that the LVR restrictions are not intended to be permanent.
They will be removed once housing market pressures have moderated and when we are confident there will not be a resurgence in house price inflation (Wheeler (2013)). But how should the exit be coordinated with the expected OCR tightening cycle?