Borrowers shifted several billions of dollars of mortgage and business loans to interest only in April, as the country went into lockdown due to COVID-19.
As at the end of April, 24% of the $277 billion of housing loans borrowers had with banks were interest only. This was up from 21% in March and 19% in February, according to the Reserve Bank (RBNZ).
The portion of interest only business loans increased to 41% in April, from 38% in March and 36% in February.
The figures show borrowers largely rearranged their debt rather than borrow a lot more.
The value of business loans on banks’ books only increased by 0.15%, or $182 million, to $118 billion in April.
Meanwhile the value of housing loans fell by 0.2% - the largest monthly decline seen since the RBNZ started collecting this data in 1998. The lockdown meant the housing market essentially froze in April.
The value of deposits held by banks increased again in April - up nearly $5.6 billion, or 1.5%, to $385 billion.
It’s worth noting the Government injecting about $11 billion into the economy via its wage subsidy, which affected these figures.
Of this $385 billion of deposits, $193 billion were made by households. The value of their deposits increased by 1.9% from the previous month.
The increase in household deposits was all in transaction and savings accounts, with term deposits down.