WELLINGTON (Reuters) – The Central Bank of New Zealand said on Wednesday it would consult next month on whether to reintroduce limits on the amount of “high-risk loans” banks can grant, amid a backdrop of growing fear of a housing bubble in the country.

The Reserve Bank of New Zealand removed loan-to-value ratio (LVR) restrictions on mortgages until May earlier this year to stimulate credit flows and boost the economy hit by the coronavirus pandemic.

But historically low interest rates, no LVR restrictions, and chronic shortages have pushed up prices in an already booming housing market.

House prices in New Zealand have climbed nearly 90% over the past decade, with some centers rising 20-30% in the past three years.

The RBNZ said it would consult on reinstating LVR restrictions on high-risk loans from March.

“Circumstances in the lending market have since improved and we are now seeing rapid growth in lending to high-risk investors,” Deputy Governor Geoff Bascand said in a statement.

Under LVR restrictions, banks could only grant up to 20% of their residential mortgages to owner-occupiers making deposits below 20%. No more than 5% of these loans could be made to investors with deposits of less than 30%.

The RBNZ also said on Wednesday that it had delayed the start of increases in bank capital requirements until 2022. The increase in the prudential capital buffer will not begin until July 2022.

Westpac Bank said the actions were aimed at cutting home loans and supporting business loans.

“LVRs on real estate investors could ease some of the heat in the housing market,” Chief Economist Dominick Stephens said.

“Meanwhile, capital requirements would be a hand brake mainly for business loans. Delaying their introduction is therefore favorable to business loans. “

The RBNZ also announced that restrictions on dividend payments will be maintained until March 31, 2021, or later if necessary.

The RBNZ is expected to keep interest rates at 0.25% at its meeting on Wednesday, while introducing a new monetary policy tool to lower borrowing costs for lenders.