The central bank is reviewing whether all lenders – not just banks – should be subject to loan-to-value ratio (LVR) restrictions, as part of phase two of the review of the Reserve Bank Act.

The Reserve Bank says current LVR restrictions “could be undermined” if non-banks “are willing to offer the loans that the Reserve Bank has restricted”.

But Southern Cross Financial acting chief executive Terry Butler fears an LVR extension to all lenders could impact on the availability of finance, as well as investment opportunities for P2P investors.

He says a widening of the LVRs was symptomatic of a “nanny-state philosophy”.

“Individual investors place their funds into individual loans, so if they don’t like the risk profile, for example, if the LVR is too high, they simply do not invest their funds there. “By imposing restrictions on us, they are taking away the free choice that those investors have. This is simply an extension of the nanny-state philosophy that is invading all sectors of our life.”

Gold Band Finance chief executive Martin Brennan says wider LVR restrictions would have an impact not just for “Mr and Mrs” buying a house, but for businesses looking to raise financing.

He questions whether an extension to non-banks would have a significant impact, given the non-banks’ small share of the market.

“You’d think smaller non-banks would not be a factor on residential property lending in New Zealand.”

The future direction for the LVRs currently remains unclear.

In recent speeches, Reserve Bank deputy governor Geoff Bascand has indicated LVR widening could be a “permanent” fixture, but he has also suggested loosening speed limits again.