Mortgage approvals have dropped to their lowest level for an August week since the Reserve Bank began recording the data in October 2003.
The central bank says just 4,963 home loans were approved in the week to August 13. For the 13 week period to August 13 they're down 24.9% from the same period last year.
At NZ$638.6 million, the value of mortgages last week was down 23.1% based on the same 13 week comparison, and was the second lowest August weekly value in the Reserve Bank series beaten only by the NZ$559.5 million value of the 5,632 home loans approved in the week to August 13, 2004.
After sinking to four consecutive weeks of non-holiday period loans during June and July the volume of approvals rose 501 week-on-week to 5,466 in the week ending July 30 before dropping again, week-on-week, over the past two weeks.
And last week’s figures are way down on equivalent periods in 2008 and 2009. For the week to August 14, 2009 7,231 mortgages were approved valued at NZ$928.8 million and approvals for every week in August 2008 easily topped 6,000.
The Reserve Bank defines an approval as a firm commitment to provide credit for the purchase of housing, which has been accepted by the borrower. It says a commitment exists once the home loan application is approved, and a loan contract or letter of offer has been issued to the borrower.
Included in the figures is the refinancing by one bank of other banks customers, any loan where the security changes, and any loan where the liability holder changes.
Excluded is own customer refinance, - the ‘rolling over’ of a fixed rate loan, and its subsequent refinancing, business borrowing where the security is the owner’s home, and the underlying value of a loan being “topped up.”
Seven banks respond to the survey representing more than 99% of registered bank lending for housing, and about 94% of total housing lending. The series, which the Reserve Bank describes as an experimental one, began with data for the week ended October 31, 2003.