Pedestrians walk near the main entrance to the Reserve Bank of New Zealand located in central Wellington, New Zealand, July 3, 2017. REUTERS/David Gray

By Lucy Craymer and Renju Jose

WELLINGTON (Reuters) -New Zealand's central bank on Tuesday said it planned to ease mortgage loan-to-value ratio (LVR) restrictions from December 1 as house prices are now with sustainable estimates after a sustained fall.

"Easier LVR settings will give banks more flexibility to lend, improving market efficiency and access to credit, particularly for first home buyers," the Reserve Bank of New Zealand Acting Assistant Governor Angus McGregor said in a statement.

From December 1, 25% of the new loans banks issue to owner-occupiers can go to buyers with deposits of less than 20% of the property's value. Currently only 20% of loans can go to these buyers.

McGregor said that it was appropriate time to review default settings as house prices are within the central bank's range of sustainable estimates, growth in mortgage lending remains moderate and the share of high risk lending is low.

House prices are now roughly 16% below their peak in 2021 and data from the Real Estate Institute of New Zealand released earlier on Tuesday saw house prices in September down 1.5% on the same time a year ago.

The central bank statement added that debt to income restrictions introduced last year were also helping to underpin borrower resilience and will help to contain the severity and consequences of any housing market corrections. These will remain in place.

New Zealand Finance Minister Nicola Willis said relaxing the restrictions on the amount banks can lend will make it easier for people to buy their first home.

(Reporting by Lucy Craymer in Wellington and Renju Jose in Sydney; Editing by Himani Sarkar and Lincoln Feast.)