By Gareth Vaughan
The residential mortgage market has been "volatile" through the September quarter, Westpac's head of retail banking, Gai McGrath, says.
Speaking to interest.co.nz late yesterday after Westpac announced it was cutting both its four and five-year advertised mortgage rates to 5.99%, McGrath declined to comment on specific details of Westpac's business citing a black-out period before parent Westpac Banking Corporation's financial year ends on September 30.
However, speaking more generally she said volatility was the main feature of the market.
"I think if you look overall the market has been volatile. That's the way I would describe it, when the market has grown and when it hasn't," McGrath said.
"I think even if you look at the (mortgage) approval rates coming through on a weekly basis there has been a fair bit of volatility. And it's different across the country as well. We are seeing, generally across the board, a pick up in mortgage approvals. It's not just consigned to Christchurch and Auckland, which it was earlier in the year. We are seeing a broader pick up across the country but not at the same levels in every place."
The Reserve Bank's latest weekly mortgage approval figures, for the week ended September 14, show a total of 6,442 mortgages were approved valued at NZ$1.059 billion. It was the 22nd straight week where the value of approvals topped NZ$1 billion. Year-on-year, based on a comparison of the most recent 13 weeks of data to the same 13 weeks in the previous year, the volume was up 24.9% last week and the value up 38.7%.
Given Reserve Bank sector credit data shows housing debt up 1.9% to NZ$176.107 billion in the year to the end of the July, and up NZ$318 million in the month of July, the mortgage approval figures suggest a good number of customers have been switching between banks.
In the June quarter Westpac grew home loans by NZ$326 million, second to ANZ National Bank's NZ$1.09 billion, the first NZ$1 billion quarter by any bank since 2008.
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12 Comments
For 'volatility' read:
'as we confuse the public by lowering & raising various fixed rates all over the show the public are diverted from justifiedly demanding floating rate cuts'
Watch out - too much volume of mortgage approvals will give them the courage to hike those rates again. Then they can play the game of 'you better fix now cos rates will be rising'.
From the Herald this morning (for all those complaining they can't 'afford' to buy a house [no, probably not in a central leafy suburb])
http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10…
OK, so you move out to, say, Whangaparaoa from the North Shore to get a more affordable mortgage. The estimated extra petrol costs ($55 a week) aren't going to make it more expensive than the difference in mortgage payments. Mike Dennehy explains:
"1. You live close to town and have a $500,000 mortgage. Using Westpac's online mortgage calculator, repaying a $500,000 mortgage over 20 years at the current rate of 5.6 per cent p.a., your monthly payments are $3468.
"2. You move out of town and get an affordable house at, let's say, a $300,000 mortgage. Using the same calculator, the monthly repayments are only $2081. The difference looks like this - you will save $320 a week on your mortgage, and pay an extra $55 a week for transport. You're $265 a week better off, and you're on the housing ladder. It gets better: the annual difference is $16,640, but you only have to come into work for a maximum of 48 weeks, so the extra travel works out at $2640 a year. You're better off by a whopping $14,000 a year!"
True. But I'd still rather own my own home than rent downtown.
Interesting the numbers do show that it is cheaper to travel than it is to borrow more for close locations. Would be interesting to research the sliding scale of suburb 'cheapness' compared to travel time/costs - perhaps there is an optimum point.
Maybe biking to work is not that big a cost saver.... & I thought I was beating the system ....
Of course there are sweet-points. There are still plenty of centralish suburbs where you can buy, some of the dodgier streets of Point England, GI, Panmure are still pretty cheap (<350k) but it's what I'd term a "stabby" street where going to check your mailbox while wearing the wrong-coloure bathrobe will land you with a problem significantly greater than a big mortgage or a commute.
So price diminishment relates to socio-economic/security levels as well as distance from CBD.
Maybe less people are unwilling to humble themselves and live in a lower income suburb. Whereas previous generations didn't value themselves so much on where they lived.
So - bigger mortgages from higher pride levels?
Start out small and then move up the ladder whenever possible. the younger ones are missing this step.
I've done that in 2001 when we moved to Auckland - start out in Panmure, then Green Bay, Ellerslie, Parnell and finally Freemans Bay.. Now in brsibane, and we are doing exactly the same again in a 2br house..
I don't think it's pride as such. A generation and a half ago, Grey Lynn was a welfare/low income / new immigrant suburb. It was a poor area but safe. I think the thing that's changed is that these days the crime and disrespect for property/society makes living in porrer areas unpopular.
My friend grew up in an immigrant family in Grey Lynn and pretty much nobody locked their houses, kids played in the streets until after dark and a street would be unlusky if there was a burglary there in any given 5 year period, even though it was regarded as "scungy".
These days in the suburbs where you can get a place for $250k, generally it's quite an unpleasant society to be a part of.... downright scary in many cases (having lived in a few myself).
Again this situation just reinforces to me how gulible and stupid the majority of home owners are, as there certainly is room for Banks to be more agressive to secure the greater % of new and re-newed morgages. Westpac has taken the first step in reducing long term rates - just sit back and watch all the rest follow. Long may it continue, and who knows, floating rates may also come down.
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