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WELLINGTON, Feb 8 (Reuters) - The Reserve Bank of New Zealand (RBNZ) will undertake a cost-benefit analysis of imposing debt-to-income (DTI) limits aimed at cooling down a red-hot housing market, New Zealand's finance minister said on Wednesday, though it is unlikely DTI measures will be used this year. The RBNZ has been lobbying the government for months to get permission to add DTIs to its macroprudential arsenal to combat the country's "excessive" house price growth in a low interest rate environment - while simultaneously attempting to meet a minimum inflation target.
"I have discussed DTIs with the Reserve Bank Governor, who remains concerned about the levels of debt in some households in the context of recent increases in house prices," Finance Minister Steven Joyce said in an emailed statement.
Despite this latest step towards convincing the government to sign off on debt-income limits, there was uncertainty over if, when and how DTIs would be implemented.
"There are lots of unknowns and then you throw in the fact there's a changing government, changing governor, it looks like a stretch we’ll see anything this year," said Phil Borkin, senior economist at ANZ.
New Zealand's national elections were scheduled for Sept 23 with RBNZ Governor Graeme Wheeler announcing this week he would step down three days later at the end of his five-year term, leaving deputy governor Grant Spencer temporarily at the helm while the bank searches for a new chief.
Wheeler said in November when the central bank cut interest rates to the current record low of 1.75 percent that he was lobbying the government for permission to set DTI limits, although he said at the time he had no immediate plans to use them.
The RBNZ's signalling that there were to be no further rate cuts and cooling house prices in Auckland made it unlikely the bank would use DTIs in current market conditions, economists said.
But record levels of migration have kindled fears that modest growth in Auckland could be temporary.
"They'll have it in their toolkit for that rainy day, the bank wants that option," said ANZ's Borkin.
New Zealand house prices rose 11.8 percent in the year to December, though the red-hot market of Auckland saw some cooling, the Real Estate Institute of New Zealand (REINZ) reported last month.
Joyce said that a public consultation for views on DTI measures would begin in March and continue through the first half of the year.
The RBNZ will meet on Thursday to set monetary policy and is widely expected to keep rates on hold at 1.75 percent. (Reporting by Charlotte Greenfield; Editing by Jane Wardell and Eric Meijer)