Home loan lending helps bank stability
It says the growth of New Zealanders’ saving levels and their declining appetite for debt are a positive thing for Kiwi banks, and the fact that prices have edges back a bit reduces banks’ vulnerability to a sharp price correction.
“House prices in New Zealand have abated in an orderly manner in the past few years – more significantly than what has been observed in Australia, where property prices remain more inflated.”
But with the housing market heating up again, supported by low interest rates, the ratings agency says a sharp fall in house prices is still a key risk for bank ratings in this country.
House prices, unemployment rates and other factors impacting on borrowers’ ability to service their home loans are some of the variables taken into account when setting bank ratings.
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