Reserve Bank Governor Adrian Orr is refreshing his calls to the Government to give the bank more tools which could be used to tame the housing market.
But he has suggested that the Government's decision around giving the central bank debt-to-income (DTI) restriction powers is a political one, as it might adversely impact first home buyers.
"It comes down to a political decision around whether they [the Government] are willing, or not, to provide those tools and accept some of the challenges that may bring," Orr told media yesterday.Â
His comments come as Finance Minister Grant Robertson prepares to unveil a suite of demand-side measures aimed at "tilting the balance" towards first home buyers.
Former Reserve Bank Economist Michael Reddell told Mike Hosking debt to income being used as a tool by the bank would clamp down on demand.Â
"It would make it harder for people at large to buy houses."
Reddell warned the move could have an impact on first home buyers.Â
"People who take on very high amounts of debt relative to their current income, might be judged to be at more risk of getting into trouble and losing the bank's money if things go wrong."
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