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Kiwibank made little difference to mortgage market growth: Tripe

The mortgage market would have grown by about the same amount through the global financial crisis (GFC) even if the government-owned Kiwibank hadn't existed, says David Tripe, head of banking studies at Massey University.  

Thursday, November 25th 2010, 9:52PM

by Jenny Ruth

Kiwibank has dominated mortgage lending by registered banks since the December quarter of 2008 and, although its hectic growth has slowed in recent quarters, continues to lend at a much greater rate than its market share.

"Kiwibank is getting them (mortgages) because they've made the decision they want that business," Tripe says. In Kiwibank's absence, the mortgages it has been writing would have been shared around the other banks, making little difference to the overall amount of mortgages written, he says.

Excluding SBS Bank, which became a registered bank in October 2008, mortgage lending by registered banks rose $0.97 billion in the December 2008 quarter and Kiwibank accounted for a staggering 89.7% of that.

In the nine months ended June 2009, Kiwibank accounted for 45.9%, or $2.27 billion, of the $4.95 billion in mortgages written by registered banks. Over the following year, it accounted for 29.4% of the $6.34 billion written.

In September 2008, Kiwibank accounted for 3.76% of the bank mortgage market. By June 30 this year, it accounted for 6.11%.

"I don't think it (Kiwibank's existence) has made any difference as to whether the business has been done in the first place - maybe a little bit of difference at the margin," Tripe says.

Similarly, if the proposed "heartland bank," formed from the merger between Pyne Gould's Marac and the Canterbury and Southern Cross building societies, gains the banking licence it hopes for, it's unlikely to make a huge difference to how competitive the banking market is, Tripe says.

"They're simply going to be too small in any market segment - they will provide competition around the edges," Tripe says.

"Heartland bank" had total assets of $2.2 billion at June 30 compared with SBS Bank's $2.58 billion and its mortgage book was just $278.5 million.

 

« ASB's mortgage book shrinks for a second successive quarterKiwibank's growth momentum slows »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 ▼2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.15 3.29 ▼3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 ▼3.85 ▼3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac ▼3.39 3.45 ▼2.99 ▼3.35
SBS Bank 4.54 3.09 3.19 3.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.59 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 ▼2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 ▼3.29
TSB Bank 5.34 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 3.65 3.69 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.12 3.19 3.14

Last updated: 6 August 2020 8:24am

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