Mortgage approvals hit record low in mid July as housing market goes deathly quiet

Mortgage approvals hit record low in mid July as housing market goes deathly quiet

Mortgage approvals hit a record low for a non-holiday week in the last week to July 9, Reserve Bank figures show.

The number of approvals fell to 4,867 in the week to July 9 from 5,241 in the previous week, making it much lower than even during the pit of the housing recession in October 2008 when prices were falling 10% from their November 2007 peak and the global financial crisis was at its worst. The Reserve Bank's records date back to October 2003.

The number of approvals in the 13 weeks to July 9 was down 20.7% on the same period a year earlier.

The value of these approvals was NZ$601 million in the week to July 9, down from NZ$679.9 million the previous week. The value in the last 13 weeks was down 18.6% from the same period a year ago.

Annual bank credit growth to households has fallen to around 2.5% from almost 10% two years ago, Reserve Bank figures show.

New Zealanders are unwilling or unable to add much more to their debts, which now collectively represent just under 160% of GDP, up from 102% ten years earlier and 58% in 1991, Reserve Bank figures show.

Even though interest costs as a percentage of collective disposable have fallen to 11% from a peak of 14.9% in the September quarter of 2008, home buyers remain wary of adding more debt as interest rates start rising. Many borrowers have much higher servicing costs, given many home owners are either debt free or have very low mortgages.

See the interactive chart for mortgage approvals below.

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Very interesting point on the fixed to floating move. I'll have a chat with the RBNZ.

Here's a link to that BNZ confidence survey. Must have given Tony Alexander a bit of a fright...

"Our monthly survey of the confidence of Weekly Overview readers has produced a decline for the third month in a row with sentiment now at the level of April last year. Only a net 2% of the 542 respondents expect the economy will get better over the coming year down from 26% in June and a peak of 56% in September last year."

"With regard specifically to residential real estate the over-riding themes are vendors still not being realistic in their price expectations, buyers being very cautious, and those who do not have to sell keeping their property off the market and producing a growing shortage of listings."

And some comments from people in the Finance sector

"Very quiet, less than half normal activity. A few loan applications but 80% rejection generally due to risk too high. Generally small business wanting to borrow have left it too late with balance sheets in poor state."

And the real estate sector:

"Real Estate, Apartments Wellington City. Total crisis time for the apartment market with values collapsing, big money being lost, tenants cannot be found etc, etc. Total over supply of both apartments for sale and rent and many owners/landlords not willing to meet the market reality. Some big losses likely - probably a 25% value drop ahead at this rate or bigger drop if even more apartments are constructed. People who purchased in Soho off plans have lost on average $50,000 per apartment."




FYI to all John Banks is keen for the Super City to sell infrastructure bonds to Mums and Dads to pay for local government projects.

Hmmm. Yet more debt being piled up on future generations because of decisions made now by Babyboomers like John Banks.




FYI to all. Here's the latest from TradeMe on property listings, rental levels etc.

Rental property listings on TradeMe were down 18% nationally in the June quarter from a year ago, while listed rents were up 4%.

Here's the commentary.

"Anecdotally, we’re hearing the drop in supply is due to reduced turnover as tenants are sitting tight in their properties; and landlords are opting to lock tenants into long-term tenancies. The national average rent has increased from $365 to $380, up 4%. We didn't fall off our chairs when we saw the rent tick up as last quarter supply was tightening and interest from tenants was on the increase"

And the table to go with it.



Steve, there are some comments in this story from Rob Alloway on Jacks Point. A couple of months ago now but they were apparently selling a few...