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Another month of falling loans – Centrix

Borrowing is dropping again and the best credit risks are again faring worst, according to new data.

Wednesday, March 30th 2022, 6:00AM 2 Comments

by Eric Frykberg

It comes in the latest monthly report from the credit reporting company, Centrix.

It attributes the change to higher interest rates, to the Credit Contracts and Consumer Finance Act (CCCFA), as well as tighter Loan to Value Ratio (LVR) credit.

The figures show that for February, the value of new residential mortgage loans fell 21% on the same month a year earlier.

That amounted to nearly $1 billion in reduced lending.

Centrix added the data showed those with the highest credit scores were impacted most, as happened in January.

Despite rising interest rates, mortgage arrears remained low, thanks to the large number of fixed mortgages.

But pressure on borrowers would grow as fixed terms expired and were replaced at higher rates.

Centrix says the proportion of mortgage applications that were approved is just 34%.

As with the previous month, the worst impact was on those with a credit score of 700 or above, while those on 500 or lower were already being blocked for economic reasons and so were not affected by the recent changes to the law.

Commentators have suggested this fact shows that pre-existing controls were already working to stop borrowers from taking on unpayable debts, and the new rules penalised the wrong people.

Centrix adds that arrears on mortgages are low, at 1%, and that is down from 1.2% a year ago and 1.5% a year before that.

In contrast with home loans, business loan defaults were up 4%, with the retail sector especially hard hit.

Tags: Loan Market

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Comments from our readers

On 30 March 2022 at 2:32 pm Sonny K said:
What an achievement by this bunch of politicians. Every decision of theirs has had a Domino Effect on an impending recession. Investors will get a double whammy - interest rates and loss of interest deductibility due to Labour tax grab.

They are dreamers of a utopian welfare state at the expense of hard-working kiwis and mums and dads with investment property who don't want to rely on pension at retirement.

To be appointed a CEO of an organisation, you need education, knowledge and tremendous demonstrated work experience. Here these politicians become CEO of a country with no prior experience or expertise.
On 1 April 2022 at 4:20 pm Andy the adviser said:
Well said, Sonny K.

"Commentators have suggested this fact shows that pre-existing controls were already working to stop borrowers from taking on unpayable debts, and the new rules penalised the wrong people."

However, there has been absolutely no apparent restrictions on Afterpay, lay-buy or hire purchase companies. The poor credit applications will continue while retailers offer commissions and bonuses to salespeople.

Why are Financial advisers penalised, scrutinised, ostracised and legislated so much, when there is absolutely no monitoring of the worst culprit = the retail and car sale sectors?

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 5.95 4.85 5.35 5.65
ANZ 5.94 ▲5.95 ▲6.40 ▲6.59
ANZ Blueprint to Build - - - -
ANZ Special - ▲5.35 ▲5.80 ▲5.99
ASB Bank 5.85 ▲5.35 ▲5.80 ▲5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - ▲5.35 ▲5.69 ▲5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 ▲5.95 ▲6.29 ▲6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - ▲4.75 - -
Co-operative Bank - Owner Occ 5.85 ▲4.85 ▲5.35 ▲5.65
Co-operative Bank - Standard 5.85 ▲5.35 ▲5.85 ▲6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.95 5.45 -
Heartland Bank - Online 4.10 ▲4.40 ▲4.90 ▲5.10
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.10 5.00 5.75 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 5.85 6.19 6.39
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 4.85 5.19 5.39
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society 6.45 ▲5.55 ▲6.15 -
Pepper Money 4.49 - - -
Resimac 6.19 5.60 6.16 6.29
SBS Bank 5.79 5.05 5.69 5.89
SBS Bank Special - 4.55 5.19 5.39
Select Home Loans 4.09 4.29 4.86 5.09
TSB Bank 5.59 5.14 5.79 6.15
TSB Special 4.79 4.34 4.99 5.35
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 ▲5.95 ▲6.29 ▲6.59
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.94 - - -
Westpac Special - ▲5.35 ▲5.69 ▲5.99
Median 5.85 5.00 5.69 5.99

Last updated: 23 June 2022 9:02am

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