WELLINGTON, May 26 (Xinhua) -- The Reserve Bank of New Zealand (RBNZ) confirmed its proposal to ease mortgage loan-to-value ratio (LVR) restrictions on Friday.

LVR restrictions promote financial stability by limiting high-risk mortgage lending. This is done with the aim of reducing the impact and severity of housing market corrections by increasing the resilience of the banking system and households, said an RBNZ statement.

Feedback was sought from registered banks in late April on the implementation of the proposal. Following a review of the feedback received, the decision has been made to proceed with easing the restrictions, it said.

"In making this decision it is important to reiterate our assessment that the risks to financial stability posed by high-LVR lending have reduced to a level where we believe the current restrictions may be unnecessarily reducing efficiency," said RBNZ Deputy Governor Christian Hawkesby.

Restrictions on high-LVR residential mortgage lending set a "speed limit" on how much new low-deposit lending banks can do, Hawkesby said.

From June 1, LVR restrictions will be eased from 10 percent limit for loans with LVR above 80 percent for owner occupiers, and 5 percent limit for loans with LVR above 60 percent for investors, to 15 percent limit for loans with LVR above 80 percent for owner occupiers, and 5 percent limit for loans with LVR above 65 percent for investors.

The previous LVR settings were put in place in November 2021 when risks were elevated. The restrictions have built resilience in the financial system, which has been evident in the past year as house prices have fallen without widespread impacts on financial stability, Hawkesby said.