The RBNZ has made the call as part of its latest Financial Stability Report, released this morning.
LVR limits have been "successful in reducing the more excessive household mortgage lending", The Reserve Bank said. The central bank added LVR rules have improved the resilience of banks to a deterioration in economic conditions.
Yet fears of excessive high LVR lending have made the central bank decide against loosening rules from current levels.
NZFSG’s Bruce Patten said the decision “wasn’t a surprise, given the low interest rates and renewed market activity”.
He added: “It would have been a little irresponsible to make any changes, although a change in the first home buyers LVR allowance would have been a nice Christmas present for some.”
Glen McLeod of Edge Mortgages said borrowers, particularly first home buyers, were in a "strange situation".
He added there was "no respite for home loan purchasers to get a home above 80% LVR". "I question the restriction for first home buyers only being able to max purchase at $600,000.00," he said.
In its FSR report, The Reserve Bank said financial system vulnerabilities remain "elevated" and international risks have increased.
RBNZ Governor Adrian Orr sounded caution about the low rate environment leading to increased debt and inflated asset prices.
The FSR report stated: " Long-term interest rates have declined in a number of countries, including New Zealand, and are expected to remain low for a prolonged period.Low rates are necessary, and have helped to cushion the New Zealand economy and borrowers from the effects of weaker global growth.
"Over the longer term, prolonged low interest rates could lead to some borrowers taking on too much debt and for asset prices to become overheated. This could increase the vulnerability of the economy and borrowers to future economic downturns."
Current LVR rules will remain in place for the medium term. Up to 20% of loans to owner-occupiers can have deposits of less than 20%, and up to 5% of home loans to investors can have a deposit of less than 30%.