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: Thursday, March 28th, 10:13PM

Mortgages

rss
Latest Headlines

Home loan lending volumes remain soft

August lending numbers weakest for three years.

Wednesday, October 5th 2022, 6:00AM 1 Comment

The latest date on mortgage lending volumes reveals the weakest August numbers since 2019, and also show low deposit loans are proving harder to get.

The total lending flow of $5.4 billion was significantly lower than the same month last year ($8.2 billion), and was the lowest figure for the month of August since 2019.

More significantly there were just 15,109 loans made and this was the weakest number since 2013.

CoreLogic says investors and owner-occupiers are struggling, with lending continuing to fall in recent months.

Its buyer classification data has shown a similar pattern in recent months, albeit with some signs of a pick-up for first home buyers lately.

Gross mortgage lending flows remained soft in August, with low-deposit finance hard to secure –just 0.7% of investors got such a loan last month (excluding new-builds), and 4.1% for owner-occupiers.

A cautious attitude towards low equity loans isn’t hard to understand in an environment where property values are still falling, Corelogic chief property economist Kelvin Davidson.

More generally, after a period where mortgage rates showed signs of a peak, the renewed increases in the past week or so will remain testing for new borrowers, and those rolling off older fixed loans.

Given that property sales data for August has already been available for a few weeks now –and it remained very weak –there were no surprises to see that gross mortgage lending activity (across new loans, top-ups, and bank switches) was also sluggish last month.

Davidson says there were hints that a pick-up for interest-only (IO) lending has helped some investors purchase property in the past few months.

However, it is likely to be light relief for investors.

“Given the removal of interest deductibility for purchasers of existing property, there’s now more of an incentive for investors to repay some principal.”

He says that low deposit mortgages remain very difficult to secure. After exemptions (eg: new-builds), just 0.7% of investor loans were approved with less than a 40% deposit in August –versus the speed limit of 5%. And only 4.1% of owner-occupier loans had <20% deposit, against the speed limit of 10%.

“Given continued falls in property values, it’s not hard to understand a cautious attitude from the banks when it comes to approving loans to borrowers who already have lower equity levels.

“With housing affordability still stretched and mortgage rates higher, it’s likely that fewer borrowers really want a high LVR loan either.”

Davidson says the looming pressure for the mortgage market is that many borrowers roll off previous low interest rates onto a much higher repayment schedule.

The scale of this ‘refinancing wave’ isn’t as big as it used to be –currently 44% of existing mortgages (by value) are fixed and due to roll over in the next year, which is well down from the peak of 66% in June last year, and back down to levels last seen in early 2018.

“Anybody rolling onto new rates will still be seeing a large change in their repayments, given the sharp increases since the middle of last year.

While the interest rate cycle is closer to its peak than the trough, there is still likely to be increases, despite strong competition amongst the banks.

“It’s encouraging that most borrowers seem to coping pretty well –helped by low unemployment.

“The Reserve Bank data suggests that lenders haven’t felt the need to increase their provisions for bad debts too much, and just 0.2% of loans are non-performing.

Tags: CoreLogic

« Cost of living pressures “chilling” - reportRBNZ goes again: Why the bank increased rates »

Special Offers

Comments from our readers

On 5 October 2022 at 10:25 am Andy the adviser said:
By all accounts, lending is down is because banks are still turning down perfectly good proposals for no apparent reason. And these are not the low deposit deals we are talking about. LVRs of 30-40% are even being declined without any consideration given to how this was achieved (eg good account history and fiscal sense). All common sense has gone out the window.

This is either due to the effects of the CCCFA, or banks have run out of the cheap money and are trying to increase their margins on existing lending.

The decline of some proposals is downright illogical and frustrating. It certainly doesn't meet the code of "working in the best interests of the client".

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
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 28 March 2024 9:42am

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