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: Tuesday, August 4th, 10:16PM

News

rss
Latest Headlines

Mortgage demand picked to decline

Banks are expecting a fall in demand for mortgage lending in the second half of 2020, according to a new Reserve Bank Credit Conditions Survey.

Thursday, July 16th 2020, 1:55PM

by Miriam Bell

The survey, which was conducted at the end of June, aims to help understand how credit conditions have changed post-lockdown and how they are likely to evolve going forward.

Twelve banks, including the five largest, provided separate responses for household, small and medium-sized enterprises (SMEs), corporate, commercial property and agricultural lending.

While some sectors showed a continuation of lending trends that pre-date the Covid-19 crisis, a change was noticeable in the residential mortgage lending sector.

Prior to lockdown mortgage lending was firmly on the rise but, in the survey report, banks reported a decline in demand for mortgage lending over the first half of 2020.

The banks attributed a fall in the volume of enquiries to the nationwide lockdown which started on March 26.

Several banks noted enquiries from both owner-occupiers and investors rebounded in May, but they are anticipating a fall in demand for mortgage lending in the second half of 2020, the report said.

“Banks noted that lower interest rates may support demand. However, banks predict the economic impacts of COVID-19 will largely offset this.

“One bank noted they expect more distressed house sales as government financial assistance packages begin to roll off and the level of unemployment increases.”

When it came to mortgage lending standards, banks reported that there had been no material changes to their serviceability standards.

But they said that Covid-19 has resulted in greater income uncertainty given the likelihood of higher unemployment and fewer hours worked, the report said.

That means banks expect to perform more thorough due diligence to assess income and job security.

For example, higher haircuts will be applied to variable or “at risk” income (like bonus, commission, boarder/flatmate rent, Airbnb income) included in servicing assessments.

The banks expect this will impact on the credit available to applicants.

Most banks didn’t report a change in appetite for high-LVR lending despite the temporary removal of restrictions, the report added.

“One bank did note that high-LVR applicants would likely require very strong servicing positions and that property type and location would need to be less susceptible to price declines.”

The Reserve Bank’s report comes on the back of its most recent residential mortgage lending data which showed a strong rebound in new mortgage borrowing in May.

At the same time, mortgage advisers have been reporting that business is busy with lots of activity from both investors and home buyers.

Meanwhile, in the Reserve Bank report, banks noted a decrease in demand for commercial property lending in the first half of 2020 and forecast a significant slowdown over the latter half, particularly for development lending.

“Banks reported that uncertainty surrounding the depth and duration of the downturn has affected market confidence and slowed pre-sales in residential development projects.”

Further, the current economic environment means that banks are generally more cautious and have reduced their appetite for both new development and investment lending, the report said.

Read more:

Mortgage borrowing rebounds in May 

Advisers buoyed by strong property market 

Tags: banks coronavirus Covid-19 demand home loans interest rates Lending LVR mortgages property investment RBNZ real estate Reserve Bank

« Advisers buoyed by strong property marketServicing tests hinder home loan market »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
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 4.35 4.45 -
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 2.99
The Co-operative Bank - Standard 4.40 3.05 3.19 3.49
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 3.17

Last updated: 4 August 2020 11:33am

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