The New Zealand Bankers Association has criticised the Reserve Bank's surprise proposal to increase capital requirements for mortgages with high loan-to-value ratios.The association's chief executive, Kirk Hope, said the Reserve Bank gave little or no indication of its proposals, which did not include sufficient justification."Clearly, little modelling… has been done by the RBNZ to confirm their assumptions," Hope said.He questioned the Reserve Bank's emphasis on general economic conditions in assessing the risks from high LVR loans, instead of individual borrowers' circumstances, saying the association would like to see more evidence backing up the proposal."Banks already have a margin added to PD (probability of default) and LGDs (Loss Given Default) to address what the RBNZ considers to be a low correlation factor in Basel II settings," Hope said."There isn't sufficient justification in the paper, and… clearly, little modelling… has been done by the RBNZ to confirm their assumptions," he said.Hope also criticised the short consultation period (submissions are due by April 16), saying it would be difficult for banks to do their own modeling in the time available, which is "very disappointing".