1 Comment 1 Commentby Susan Edmunds
The survey shows that profits rose 8.61% across the New Zealand banking industry in 2013, with an increase in lending assets of 4.35%.
But head of financial services John Kensington said regulation had been a big focus for banks in the past year and was the biggest threat to the industry’s “green shoots” over the coming 12 months.
“Before the LVR rule change the banks were probably writing 20% to 30% of their mortgages a month with a greater than 80% LVR, now, they’re probably writing 4% to 6% of them with a greater than 80% LVR. There’s going to be spirited competition for anyone who’s a good loan.”
He said banks were now less likely to offer incentives such as “put your new car on the mortgage”, which was likely to push some of that consumer lending back to finance companies.
KPMG’s report said the rules had likely slowed rather than stopped activity but banking industry participants had suggested a number of possible unintended consequences.
One was that competition for homes in Auckland might be condensed into the $500,000 to $700,000 price range.
Another was that some people might decide they would have to be renters for life.
The report said: “They may therefore be prepared to use deposit money for other things. If so, it may help to explain some of the economic upturn via expenditure at the end of the year, particularly where the finance companies sector saw a large increase in request for personal, boat, car and jetski-type of loans.”
The report said if the rules could avoid a price bubble until more supply came online, they would be a success. “If, however, they do not ease the house price bubble, and also keep people out of the market at a time when they could be investing, this would be undesirable.”
| « Tide about to turn on low equity loans | Borrowers still exposed to rates rises » |
Special Offers
Sign In to add your comment
© Copyright 1997-2024 Tarawera Publishing Ltd. All Rights Reserved