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Mortgage lending likely to ease this year: CoreLogic

The property research firm CoreLogic thinks bank lending for mortgages is likely to ease off this year.

Wednesday, January 12th 2022, 9:11AM

by Eric Frykberg

It adds this will harm first home buyers the most.

The company's chief property economist Kelvin Davidson bases these comments on the most recent mortgage statistics released by the Reserve Bank just before Christmas.

They cover the month of November and show busy activity at that time, with lending at  $9.1 billion, the fourth highest monthly total on record.

But looking forward, this intensity is unlikely to last.

Davidson warns that many New Zealanders will have to reach into their wallet quite soon to pay the higher interest rates that have already arrived, either in tandem or in anticipation of the Reserve Bank's inflation fighting practices.

He says about two thirds of borrowers will have to pay a higher interest bill in the next 12 months as their fixed-rate mortgages expire or their floating mortgages are adjusted – approximately in line with the Reserve Bank's figure of 70%.

“This will be a headwind for the housing market itself, as well as the wider economy, as households are forced to divert their spending towards mortgage debt repayments,” Davidson wrote.

Davidson adds the implementation of LVR rules has a historic precedent. In 2017, banks were told to restrict high LVRs to 10% of total lending, and they responded cautiously, cutting their actual figure to 5%.

“If history repeats this time around, there is still plenty of tightening yet to come for low deposit lending, which is likely to hamper first home buyers the most.

“A slowdown in lending flows remains firmly on the cards in 2022.”

In other analysis, Davidson says the November figures showed strong activity by owner-occupiers, with investors on a steady downwards trend.

He says they show it is almost impossible for an investor to get a low deposit loan, unless paying for a new-build.

He adds high LVR lending was still above the speed limit – at 10.5% of total loans. The new requirement of 10% kicked in at the start of the month, but Davidson says banks have a grace period to adjust to the new rules so that pre-approvals can work their way through the system.

« Select Committee may look at CCCFA next monthNon-bank deposit takers fail to elude latest Govt crackdown »

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 6.35 5.25 5.45 5.99
ANZ 6.34 5.59 6.05 6.29
ANZ Blueprint to Build - - - -
ANZ Special - 4.99 5.45 5.69
ASB Bank 6.35 ▼4.99 5.45 5.69
Avanti Finance 6.65 - - -
Basecorp Finance 7.25 - - -
Bluestone 6.89 - - -
BNZ - Classic - 4.95 5.39 5.69
BNZ - Mortgage One 6.39 - - -
BNZ - Rapid Repay 6.39 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 6.39 5.55 5.99 6.29
BNZ - TotalMoney 6.39 - - -
CFML Loans 7.25 - - -
China Construction Bank - 5.35 5.80 5.99
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼4.89 - -
Co-operative Bank - Owner Occ 6.25 ▼4.99 5.39 ▼5.69
Co-operative Bank - Standard 6.25 ▼5.49 5.89 ▼6.19
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 5.35 5.85 -
Heartland Bank - Online 4.60 ▼4.79 5.29 5.39
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.50 5.60 6.00 -
HSBC Premier 6.34 5.09 5.34 5.59
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 6.00 ▼4.79 5.15 ▼5.69
Kainga Ora 5.85 5.31 5.58 5.97
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 6.00 5.95 6.45 6.79
Kiwibank - Offset 6.00 - - -
Kiwibank Special - 4.95 5.45 5.89
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society ▲6.95 5.55 6.15 -
Pepper Money 5.29 - - -
Resimac 5.59 6.54 6.44 6.98
SBS Bank 6.29 ▼5.39 ▼5.79 5.99
SBS Bank Special - ▼4.89 ▼5.29 5.49
Select Home Loans 6.89 - - -
TSB Bank 7.05 ▼5.65 6.09 6.39
TSB Special 6.25 ▼4.85 5.29 5.59
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 6.49 5.55 6.15 -
Westforce credit union - Special - 5.35 5.85 -
Lender Flt 1yr 2yr 3yr
Westforce credit union - Standard 5.85 6.05 6.55 -
Westpac 6.39 ▼5.55 6.05 ▼6.29
Westpac - Offset 6.39 - - -
Westpac Special - ▼4.95 5.45 ▼5.69
Median 6.34 5.33 5.79 5.93

Last updated: 11 August 2022 8:40am

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