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Credit growth minimal again in February

Credit growth remained minimal again in February with mortgage lending falling from January's levels, the latest Reserve Bank figures show.

Sunday, April 1st 2012, 12:49PM 1 Comment

by Jenny Ruth

Overall credit growth was just 0.1% in February while lending on mortgages grew $189 million, down from the $379 million growth in January, and was up just 1.2% on February last year.

Credit growth has been just 0.1% in five of the last six months and the odd month out showed zero growth.

In contrast, total household deposits rose $355 million in the month and were up 8.5% on February last year.

The credit numbers are seemingly at odds with other figures such as the central bank's mortgage approvals data, which shows approvals running at 18.2% higher than at the same time last year and rising house sales.

“There's definitely more turnover going on but, seemingly, it's people with money selling to other people with money rather than new buyers entering the market,” says Darren Gibbs at Deutsche Bank.

“We're not seeing a lot of young people who would be drawing down big mortgages.”

Nevertheless, “it's definitely healthier out there.” When the credit figures do start to show reasonable growth, “it will tell you about a genuine improvement in consumer sentiment,” he says.

Dominick Stephens, chief economist at Westpac, says his bank has noticed a strong increase in mortgage inquiries lately “but not a great deal of increase in draw downs” and the latest figures suggest this is true of the wider market.

Stephens says one reason for low credit growth is that mortgage rates are so low that those with existing mortgages are repaying them at an accelerated rate.

But the figures may be dampened and the true rate of growth masked by insurance payouts in Christchurch – the Earthquake Commission has paid out $3 billion so far, he says.

There's a lag between the payouts being made and repaid or rebuilding work completed and the banks hold the money in the meantime.

“That's likely to continue to affect these numbers through the course of 2012. It's going to make them low lower than they really are,” Stephens says.

Conversely, the credit figures through 2013 and 2014 are likely to be inflated and indicate higher growth than is actually occurring, he says.

« Rod Templeton to leave Mortgage Link, won't be replacedHSBC suffers ballooning bad debt charges, mortgage book shrinks »

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Comments from our readers

On 4 April 2012 at 11:44 am vandalbear said:
I'm not sure they understand the approvals figure well. Many approvals, even when drawn down, will not affect the market size.

If a customer refinances banks, there will be an approval - but the net effect to the NZ market will be exactly the same when it draws down (not withstanding any minor top up they may do).

As lenders seek new business, there's a lot of 'swings and roundabouts' between them, with refinance activity very high.
Commenting is closed

 

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 ▼5.65 ▼5.55 ▼5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 ▼6.39 ▼6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - ▼6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 ▼5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.79 6.49 6.49
TSB Special 7.89 5.99 5.69 5.69
Unity ▼7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.50 ▼6.19 ▼5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.17 5.79 5.69

Last updated: 30 October 2024 9:36am

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