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Rise in households struggling with mortgage repayments; RBNZ: house prices still near top of sustainable levels

Mortgage arrears continue to rise but are still low by historical levels. [READ ON]

The Reserve Bank says house prices remain near the top of its estimate of sustainable levels and remain “a stretch” for many would-be buyers. [See here]

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Bank expects action on the housing boom this year

ASB economists expect Reserve Bank governor Graeme Wheeler to reach into his new toolbox this year to counter housing market-driven credit growth.

Tuesday, January 8th 2013, 12:30PM

by Susan Edmunds

They say credit growth won’t need to get anywhere near the levels of the last housing boom before the Reserve Bank starts reaching for macroprudential tools to counter it

ASB chief economist Nick Tuffley said the Reserve Bank would become less tolerant of the house price momentum building in Auckland and Christchurch, which is showing signs of spreading to other parts of the country. He said it posed a risk to both monetary and financial stability.

The macroprudential tools the bank is developing would be a way to ease the property market pressure without dampening other parts of the economy, which are already struggling. Q3 GDP figures were low compared to expectations and economic growth has proved to be weaker than predicted.

Tuffley said that weak growth would make Wheeler reluctant to raise the official cash rate until the end of this year at the earliest.

But before that, he would likely use tools such as core funding ratios, cyclical capital buffers, or loan-to-value restrictions to rein in the housing market. “We’ll hear more this year on what the Reserve Bank is looking at, and deciding what is in its tool kit, but those are the three main ones.”

He said Wheeler would look to the tools as soon as credit growth started to look excessive. “That means trying to delve into what excessive means but it’s likely to be a lower level than we’ve seen in the past.”

Tuffley said that while the last asset price boom resulted in double-digit credit growth, this time around growth would not need to be near double digits before the Reserve Bank would act.

“Some tools are likely to be resorted to more than others and some will be used when nothing else seems to be working.”

« Interest rate predictions for 2013ASB pushes out date for OCR increase »

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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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