Government looks at curbs on home loans

But the options officials are studying have been criticised by the National Party and some economists for risking an implosion of the housing market that would hit the economy.

The Reserve Bank yesterday revealed details of the study it and the Treasury are doing on options other than interest rate rises to control inflation. Officials have until the end of January to report.

Finance Minister Michael Cullen said on Tuesday that he had asked officials to consider ways to slow the economy, but noted that the options were not "exactly attractive".

The Reserve Bank is worried continued interest rate rises are not flowing through to mortgage lending and the housing market, which continues to be a key driver of inflation.

One option being considered is limiting the amount banks can lend on a property's value. Some lenders, including Government-owned Kiwibank, now lend up to 100 per cent of a property's value.

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