The Reserve Bank's requirement that no more than 10% of new mortgage lending be to homeowners with less than 20% deposits has had a big impact on the overall high loan-to-value mortgage figures for the big banks.
The big five banks: ANZ, ASB, BNZ, Kiwibank and Westpac have all just released their general disclosure statements for the March quarter.
The documents show that some of the banks - and the market heavyweight ANZ particularly stands out - have sharply reduced their overall exposure to high-LVR lending.
The table below shows the amounts the banks had outstanding in high-LVR mortgages as of March and compares this with the figures as of December and September - immediately prior to October's introduction of the LVRs.
|Bank||High LVRs March||% of total||High LVRs Dec||% of total||High LVRs Sept||
% of total
|All mortgage figures in millions. All figures are"on balance sheet exposures". *NOTE: ANZ has made a slight change to its LVR bands since December. (It now has an "exceeds 80%" band rather than "80-89%" as before). The March and September figures include the new method of banding but the December figure has not been adjusted.|
Figures released by the RBNZ recently covering the first six months of the LVR regime showed that in aggregate the banks very easily came in under the 10% high-LVR 'speed limit'.
In fact during that six month period new bank commitments to high LVR customers represented just 5.6% of all new mortgage finance, after exemptions.
This has led to a substantial rebalancing of the banks' overall mortgage portfolios as fewer new high LVR mortgages are created and presumably many existing loans get re-categorised as low LVR loans following either a reduction in principal or an upward revaluation of the property.
The most spectacular move has been by the ANZ, which has seen its high LVRs exposure drop from $12.883 billion as of September to just $11.361 billion in March. That's a whopping $1.522 billion, or 11.81% reduction in its high LVR loans outstanding.
This in turn has dropped the overall percentage of ANZ's on-balance sheet mortgages that are in the high-LVR bracket to just 19.4% of the total down from 22.8% in September.
The BNZ, which already had the lowest proportion of high LVR loans anyway, has sharply reduced its share as well - in fact, in percentage terms by more than ANZ. The BNZ's $671 million, or 14.92%, reduction in categorised high LVR loans since September has seen its overall share of high-LVR loans drop to just 12.8% of the book from 15.2%.
ASB, which had the biggest proportion of high-LVR lending among the big five as of September, retains that position, even though it has shaved back its exposure somewhat. As of March ASB had $9.127 billion of on-balance sheet loans categorised as high-LVR, which represented just a shade under 22% of its total mortgage book. It has reduced the overall amount by $465 million, or 4.85% since September.
The reduction in the overall proportion of high-LVR loans being held by the banks will be welcomed by the RBNZ, which introduced the 'speed limit' restrictions after becoming concerned at the way banks were increasing their high-LVR lending - something that in the RBNZ's view could leave our banking sector in a more vulnerable position in the event of a substantial downturn in house prices.
But despite the fact that all of the banks have, to varying degrees, pared back their proportions of high-LVR lending, the fact is that all of them have achieved growth in their overall mortgage books in the past three and six months.
The table below shows the figures over the three months to March.
|Bank||Total mortgages Mar||Total mortgages Dec||Amount increase||
|All mortgage and amount change figures in millions. All figures are "on balance sheet exposures".|
ANZ, which had a spectacular December quarter in which it increased the size of its overall mortgage book by $1.3 billion - nearly as much as the other four banks put together - was again the overall leader in terms of net amount added in the three months to March - but less resoundingly so.
The ANZ saw the its overall on-balance sheet mortgage book grow to $58.508 billion, with a $631 million - or 1.09% increase.
This was slightly ahead of Westpac's $584 million gain to $38.566 billion - though Westpac's rise in percentage terms was somewhat more at 1.54%.
But staying with percentages, Kiwibank - which has recently received a capital injection from its parent company NZ Post - had the biggest percentage gain in size of mortgage book in the March quarter.
It had by amount the third biggest increase - $386 million - which was a 2.94% increase to $13.504 billion.
In the past six months Kiwibank has also had much the biggest percentage increase in its overall mortgage portfolio, climbing by 6.29% ($799 million).
In dollar terms ANZ's the way-ahead leader with a thumping $1.927 billion increase (3.41%), followed by Westpac with a $1.061 billion (2.83%) gain.
Both in numerical and percentage terms BNZ had the smallest growth, with a $320 million (1.08%) increase in size of mortgage book.