Weekly home loan approvals drop back below 5,000

Weekly home loan approvals drop back below 5,000

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.

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16 Comments

 "Supply is constrained because it is not a good time to sell"....utter rubbish. In the first instance it is not constrained and in the second, many who would like to sell have not listed because they know dam well it would only drive their price lower.

" Liquidity will soon reenter the private sector and capital markets (NZX is not a factor) and consequently banks will loosen their lending criteria."...more garbage. Other than some election pork via Kiwibank thanks to a stupid Cabinet decision, the main banks are only too aware of the critical nature of world finance markets and they will be in no bloody hurry to cut their own throats in advance of the recession evolving into a full blown depression.

" They cannot risk opportunity cost."....drivel

" ..this time is no different.."....that's not what Goldman Sachs are telling me....it's not what the smartest minds in banking are saying...it amounts to a stupid statement.

"  Put simply, it would be encouraging if objectivity and common sense prevalied over anecdotal evidence and negative mindset.".....more drivel

" There is a reason less than 2% of the world's population control more than half the world's wealth"...the % might be rough but the comment is true and the reason is there are so many like Anon here who are seriously lacking even a basic understanding of economics.

Gosh I am so upset about that anon....have another attempt to divert attention from the truth about the state of the western economies...give it your best spin and BS anon...tell the public they have nothing to worry about...tell them to borrow more and buy property....If you gave me the time of day I wouldn't believe you!

Jeez Kermit...when I google 'muppets' I find a whole tribe already there on the dark side...how could there be any room left for a Wolly?

Anon "There is a reason less than 2% of the world's population control more than half the world's wealth."

And what reason would that be? Oh never mind, sharpen the guillotines.

Seriously though anon,  this "capital on the sidelines" just what form does this take and what are the "sidelines".

Also, I think you'll find that we do have an affordability problem with the median income falling well short of being able to pay down the median house, even with the historically low interest rates prevailing. 

Cheers,

Kiwidave.

Clearly you do not bother to ascertain the facts before posting your views - supply is in no-way constrained, and inventory levels are seasonally very high and about to start rising rapidly:

http://www.interest.co.nz/charts/real-estate/houses-sale

Houses available for sale are way way above 2009 levels and close to equivalent 2008 levels (when houses prices were last falling by 10%).

It really would help if data was provided to back up assertions.
 

Your claims about rising rents are laughably incorrect - go consult the data on this site sourced from the bonds held (the DEFINITIVE data). Rents have gone nowhere in 3 years.

More interestingly the number of houses available for rent has risen rapidly since March of this year - data also available on this site. Rising supply does not mean rising rents.

Sorry the data doesnt fit..........

Yes indeed who the heck are you?

 

Here is the data. It is definitive. Yours is not. Simple.

http://www.interest.co.nz/charts/real-estate/rents-median

For completeness sake here is how the number of houses for rent has risen steeply since March:

http://www.interest.co.nz/charts/real-estate/houses-rent

 

Lots of supply hitting the market in the last 6 months then. Always a good catalyst for rising rents.

NOT.

Sigh.

Clearly you have imbibed the coolaid that there is some sort of housing shortage in NZ.

There isn't.

Hence the number of houses for sale is now also starting to increase (and from very high levels for this time of the year)

As you will no doubt come to realise in the next 6 months the cost of buying a house will be falling.

Landlords seem unable to get a simple fact through their heads.

In recessionary times,  which by the way are about to get a lot, lot worse in the next 12 months, folk do actually have extra choices in terms of accomodation to save themselves money.

They can and do, a) move back in with family, b) share accomodation with mates and c) sublet accomodation.

None of which is good news for landlords as the tenant pool is diminished.

What, didn't the spruikers who told you to buy rental property mention this?

 

There is an academic report on this from the UK recently out (which I will dig out if I have the time - and one from the US) which shows what a significant role this plays.

QV data; fall of -9.3% (sorry perhaps I should have been more specific)

http://unconditional.co.nz/blog/qv-property-values-latest-data-potential...

Did you have your eyes closed?

Then Bollard slashed interest rates to save the housing market.............
 

I know that neighbourhood Someone...and the WINZ bank is next door to the pub right...hardly normals is across the road and the pub carpark doubles as a car sales yard.

House bought in 2007 for $800k and empty since 2008. Mortgagee sale and bankruptcy looms.

testing

And we're away...line up folks for a mortgage and be in to win...you too can join the ranks of the dispossessed...see your equity go up in smoke. We can understand events in the Auckland region when we realise there is probably a migration heading there to seek work from the regions in decline....it's the poor person's version of crossing the ditch to scratch an itch. Think then of the impact on the regions. Makes it easy to see why prices have taken a steep dive in the rural areas. Throw in major problems of poor investment judgement as in Marlborough, where every encouragement was to be had to see punters become priests of the vine...lords of the fake chateau........lately they have become tenants of the banks that put up the credit. Wine is on the shoppers list...it's at the top...of stuff not to buy.

Does this explain why the Marlborough District Council has decided to make frost fans subject to resource consent....line up vineyard tenants and pay up...hand over the dosh for a consent to blow away the frost...."kaching...kaching"

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