About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Thursday, December 12th, 10:29PM
Mortgage Rates Daily Commentary
Thursday 12 December 2019  Add your comment
How advisers conquered Australia; best mortgage options over the next 5 years

Milford Asset Management portfolio manager Michael Higgins explains why mortgage brokers have become so dominant in Australia: [READ ON]

Rolling short-term mortgages could be the cheapest option for borrowers over the next five years, according to analysis from ASB: [READ ON]

 

rss
Latest Headlines

Auckland affordability a credit negative - Moodys

Poor housing affordability in Auckland is a credit negative for New Zealand covered bonds backed by mortgages in the city, according to a global ratings service.

Wednesday, March 8th 2017, 12:26PM

by Miriam Bell

A new report by Moody’s Investors Service has found that Auckland’s affordability improved in 2016 – thanks to low income rates and a rise in incomes.

But the proportion of income needed to meet mortgage repayments remains high and considerably more than in other regions.

Moody’s associate analyst Karen Burkhardt said Auckland’s high housing prices mean new home owners spend on average nearly half (46.5%) of their monthly income on mortgage repayments.

Poor housing affordability increases the risk of mortgage delinquencies and defaults.

“Auckland accounts for almost half (49.5%) of the loans in New Zealand cover pools,” she said.

“As such, we view the city’s poor housing affordability as credit negative for New Zealand covered bonds backed by mortgages on Auckland properties.”

However, the risks posed by poor housing affordability are mitigated by the current low weighted average LVRs on residential mortgage loans in New Zealand cover pools.

The report noted that the Reserve Bank has imposed limits on the proportion of mortgages with high LVRs that banks can write since 2013.

“This reduces the exposures of banks and covered bond programmes to higher-risk lending and provide a buffer in the event of declining house prices.”

When it came to the rest of New Zealand, the report found housing affordability improved in Canterbury, Gisborne/Hawkes Bay, Manawatu-Wanganui, Northland, Southland and Waikato/Bay of Plenty in 2016.

This was due to a combination of rising household incomes and lower mortgage interest rates.

However, housing affordability deteriorated in the Otago, Wellington, Taranaki and Nelson/Marlborough regions over the year.

This was because of rapid housing price increases and either declines or relatively small increases in household incomes.

As part of the report, Moody’s also ran a sensitivity analysis to gauge the impact of changes in house prices, interest rates and LVRs on housing affordability in New Zealand.

The analysis showed that Auckland is the most sensitive of any region in New Zealand to any shift in these factors.

For example, if mortgage interest rates were to rise to the 10-year average of 6.5%, the percentage of household income needed to meet mortgage repayments would increase by 8.2 percentage points in Auckland.

This is as compared to 5.5 percentage points on average across New Zealand.

While mortgage rates remain low by historical standards, they have been rising in recent months and commentators have been warning this could have a significant impact on some home owners.

The Moody’s data highlights the additional mortgage pressure that Auckland households could end up dealing with if mortgages rates continue to track upwards.

Read more:

Super City affordability slides further 

Volatility leads to tighter lending environment 

Tags: banks LVR Mortgage Rates mortgages Ratings RBNZ Reserve Bank

« DTIs should be in RBNZ toolkit - IMFWhat the RB governor said »

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
ANZ 5.19 4.05 4.05 4.49
ANZ Special - 3.55 3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank ▼5.20 ▲4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▲3.45 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.39 3.45 3.89
Sovereign 5.30 ▼3.89 ▼4.05 ▼4.39
Sovereign Special - ▼3.39 ▼3.55 ▼3.89
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.45 3.99
Median 5.34 3.99 4.07 4.39

Last updated: 9 December 2019 9:02am

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