New Zealand's central bank has announced new mortgage regulations for lenders, requiring them to hold more capital against loans to residential property investors, in an attempt to curb risky lending as house prices hit record highs. From October 1, residential mortgage loans will be broken down into investment and non-investment categories. The new rules, which will require lenders to hold capital of at least 40 per cent against all loans to residential property investors, are the latest measures designed to tame mortgage lending as the Reserve Bank of New Zealand worries that a sharp correction in the housing market, particularly in the biggest city of Auckland, may trigger financial instability. Prices there have jumped more than 10 per cent on the year. Lenders will be required to hold 75 per cent capital against mortgages extended to insured residential property investors with deposits of less than 10 per cent, and 90 per cent for similar loans extended to uninsured borrowers. The new lending category follows a radical approach taken by the central bank to target the Auckland housing market with tougher restrictions on low-deposit lending to property investors, while the government has imposed a new capital gains tax on housing investment profits. The bank is concerned about the potentially severe impact of a fall in house prices, given household debt is 160 per cent of disposable income and near the record levels hit in 2009, with Auckland house prices tripling in just over a decade.