House prices growing risk for banks – S&P
Standard & Poors announced they have left their ratings of New Zealand banks unchanged – despite concerns about the country’s rampant housing market.
But strong house price inflation, coupled with an increase in private sector credit growth, has made for increased economic risks for the banks in the view of the ratings agency.
Standard & Poors analyst Nico DeLange said they believe the risk of a sharp correction in property prices has further increased.
“If it were to occur - with about 56% of registered banks' lending assets secured by residential home loans - the impact on banks would be amplified by the economy's external weaknesses, particularly its persistent current account deficits and high level of external debt).”
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