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Survey reveals lending concerns

Mortgage advisers are concerned about tightening lending criteria and tough servicing tests, despite the record-low interest rate environment, according to a new survey. 

Monday, June 29th 2020, 8:25AM

Tony Alexander's latest survey of the mortgage advice sector reveals the industry is cautious about the lending market, even with rates dropping to historic levels. 

The independent economist has conducted research into the adviser market, and found that "at the same time as banks have cut their mortgage rates, they have tightened up lending criteria and are still assessing debt servicing ability at rates more than twice what they are advertising".

Alexander predicts banks will not ease "these various barriers to loan access", "until they see solid light at the end of the economic tunnel": "That is why border bungling is likely to already be having a negative impact on our economy," he added. 

The survey reveals strong interest in the housing market. A net 79% of advisers are seeing more first home buyers in the market and a net 51% are seeing more investors. But they have been hampered by tight lending conditions; a total of 60% said banks have tightened up.

Alexander adds: "Banks have yet to pass on the removal of LVRs (though one or two cracks are appearing just this past week), and they are requiring substantial proof of post-lockdown incomes. They are also actively discriminating against borrowers working in certain industries most heavily affected by the virus and border closure."

The economist believes the tight lending conditions could put downward pressure on house prices in the short term, but says demand will likely surge once banks loosen up.

Alexander says banks will not change their stance until they are confident of an improving economy. 

"When might they get that confidence? Certainly not before the Government can show that after we five million did our part to control Covid-19, that they are capable of doing their part and controlling the borders. If anything, the failures of the public servants in recent weeks have delayed our economic recovery and will have made banks even less willing to lend."

Tags: Lending Mortgage Advisers mortgages Tony Alexander

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 3.85
ANZ Special - 2.65 2.75 3.35
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
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 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
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 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 2.79 2.79 3.39
The Co-operative Bank - Standard 4.40 3.29 3.29 3.89
TSB Bank 5.34 3.59 3.49 3.79
TSB Special 4.54 ▼2.65 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.65 2.69 2.79
Median 4.55 3.22 3.22 3.44

Last updated: 3 July 2020 8:15am

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