tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Sunday, September 20th, 2:55PM

Mortgages

Mortgage Rates Daily Commentary
Friday 18 September 2020  Add your comment
Heartland reverse mortgage book grows by 10%

Heartland Group's New Zealand reverse mortgage book grew by 10% last year, but Aussie demand is growing even faster: [READ ON]

rss
Latest Headlines

House prices growing risk for banks – S&P

Skyrocketing house prices mean New Zealand banks are facing increased economic risks and will now have higher risk weights, a global ratings agency has said.

Tuesday, August 23rd 2016, 2:39PM

by Miriam Bell

Standard & Poors announced they have left their ratings of New Zealand banks unchanged – despite concerns about the country’s rampant housing market.

But strong house price inflation, coupled with an increase in private sector credit growth, has made for increased economic risks for the banks in the view of the ratings agency.

Standard & Poors analyst Nico DeLange said they believe the risk of a sharp correction in property prices has further increased.

“If it were to occur - with about 56% of registered banks' lending assets secured by residential home loans - the impact on banks would be amplified by the economy's external weaknesses, particularly its persistent current account deficits and high level of external debt).”

The increase in the economic risks facing the banks is contrary to the agency’s previous base-case expectation that the rise in New Zealand’s house prices would slow in 2016, he said.

The agency factored the macro-prudential tools initiated by the Reserve Bank, including the proposal to expand their scope, into their assessment of the banks.

DeLange said they consider these tools to have been only partly successful in limiting the pace of build-up of the risks facing the banks.

“In our opinion, structural constraints such as supply and demand imbalances and continued high migration levels will pose significant challenges to the effectiveness of macro prudential tools.”

For this reason, Standard & Poors will now apply higher risk weights for their loans in their capital analysis of the banks.

The agency said while there has been some weakening in the capital levels of all the banks, the stand-alone credit profiles (SACPs) of most of them will remain unchanged.

Exceptions were ASB Bank Ltd. and Rabobank New Zealand Ltd whose SACPs have weakened by one notch each.

ASB’s SACP has been revised to 'bbb+' from 'a-', which is on par with the SACP of New Zealand’s three other major banks, while Rabobank's SACP has been revised to 'bbb-' from 'bbb'.

However, DeLange said their ratings on ASB and Rabobank remain unchanged reflecting their assessment of timely financial support from their respective parents, if needed.

“The revisions of the SACPs of ASB Bank and Rabobank NZ stem from our view of increased risks across the banking system in New Zealand.

“We consider that no new significant bank-specific risks, such as any asset quality concerns, have emerged that drive these revisions.”

Tags: ASB banks Macro Prudential Tools RaboDirect RBNZ Reserve Bank S&P superannuation

« Expect OCR cut in November - economistsLooming LVRs impact on mortgage lending »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
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 4.95 - - -
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 2.95 3.45 -
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 2.93 3.07 3.24
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 3.35 2.99 3.35
SBS Bank 4.54 3.05 3.19 3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.55 2.69 2.75
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 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.15 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.00 3.13 3.02

Last updated: 1 September 2020 5:00am

Previous News

MORE NEWS»

News Bites
Compare Mortgage Rates
Compare
From
To
For

To graph multiple lenders, hold down Ctrl key while clicking in list box

Also compare rates to OCR
Find a Mortgage Broker

Add your company

Use map
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com