[News]~BNZ BANK: The new policy will take effect immediately on October 28, tightening the debt and income mortgage loan rules.
According to BNZ Bank news, BNZ Bank is taking action to limit the amount of debt that new borrowers can assume, and to implement a debt-to-income ratio for some of its loans.
The debt-to-income ratio (DTI) limits the amount someone can borrow relative to the income they earn-BNZ’s DTI will be set at 6, but it will be “constantly monitored and reviewed”.
A DTI of 6 means that someone who borrows 600,000 NZD needs to have 100,000 NZD income.
It is similar to the loan-to-value ratio that banks must currently apply. It limits the amount a person can borrow relative to the size of his deposit.
BNZ is changing the way it assesses loans and customers’ overall debt levels to ensure that they are in a safer position when interest rates rise.
source: BNZ tightens borrowing restrictions for low income borrowers [28 Oct 2021]