We have to emphasise it's all still coming off a low base - but stressed mortgage figures took another bit of a jump last month.
Reserve Bank loans by asset quality figures for July show that specific impairments on mortgages rose by $20 milllion (12.1%) from the previous month to a total of $185 million. That's the highest total in this data series that dates back to March 2018.
Loans past 90 days due but not impaired rose in the month by 4.6% to $1.139 billion - also the highest total since the start of this data series.
And total non-performing loans rose in the month by 5.6% to $1.324 billion, also a new high water mark for this series.
Historically, the non-performing loans ratio is still low against the total amount of outstanding mortgages, at about 0.4% of the $345.305 billion.
After the Global Financial Crisis of 2008, for example, the non-performing loans reached some 1.2% of the total outstanding mortgages amount.
But having said that, the impairments and past 90 days due totals have been rising rapidly from a low base in this calendar year.
From the start of this year specifically impaired mortgages have gone up from $95 million - which is a 94.7% rise, while the 90 days due mortgages have gone up by $384 million - which is a 50.9% rise. It means total non-performing mortgages have risen by $474 million, or by 55.8%.
In its summary of the latest figures, the RBNZ noted that 90 days past due mortgages are now up $94 million (9.0%) on the covid peak in July 2020, but still down as a ratio to total housing lending comparatively. Specific impairments are also up $39 million (26.7%) from this time three years ago.
In the RBNZ's sector lending data also released for July, the figures for housing lending showed that the annual growth rate in the overall outstanding housing lending stock had slowed to just 3%, which is the lowest rate since October 2012.
In its summary of the data, the RBNZ said housing lending stock increased by $679 million (0.2%) in July 2023, which was down on the $1.2 billion increase reported last month.
Total housing lending stock has now increased by $5.2 billion from the start of 2023. As some means of comparison, for the same period a year ago the increase in the stock was $9.3 billion, while for the same period in 2021 when the market was super hot, the increase over that period was $20.8 billion.
The RBNZ said personal consumer lending stock increased by $21 million (0.2%) in July 2023. The annual growth rate increased from 4.6% to 5.1% this month.
Business lending stock decreased by $1.1 billion (-0.8%) in July 2023, which is the largest monthly decline since July 2020. Annual growth dropped from 3.1% to 2.1% this month, which is the lowest since August 2021.
Agriculture lending stock increased by $271 million (0.4%), which was down on the $564 million increase reported last month. The annual growth rate increased from 1.9% to 2.1%.
31 Comments
Unfortunately, Thousands will be unable to pay mortgages come the Oct/Nov/Dec 2023, as many mortgages will have north of 10% by then.
Both Govt choices, are positively spoiling to stroke the populous - thus stoke inflation to the moon and beyond.
- The overleveraged don't know the heavy weight and razour sharpness of the certainly pending sword of damocles, that be coming.
Talk of market bottoming, will literally see the aarrse fall out of it!
Credit cards are actually a valid point. Think about it, if you are short on cash due to higher mortgage costs you will tap out your credit card. Rising credit card balances unpaid will be that precursor to failure to meet your mortgage payments.
As an aside point, they say the rich don't need a tax cut, I'm supposed to be rich but I do the weekly shopping and I notice it and I have cut back while alot of other people were still spending stupidly. Buy what you need, not what you want. And don't buy takeaways, cook a little extra when you make your evening meal and have that for lunch the next day. And only eat eggs as a treat, they are way overpriced. I bought my first 10pkt of eggs in 4mths the other day. I used to buy 30 eggs per week before the egg producers got greedy, and now it's reduced to 30 eggs per annum. A treat.
The many, many thousands on Sub-Prime NZ Rates are already creaking and listing, as they are all skirting 8 to 9.5% already.
Like landed fish on the deck, gasping their last for liquidity and relief (air) ...... that is coming much too late in 2026 or 2027.
Thats what I'm talking about Willis!
In the case of FHB, I think it was packaged as 'need' driven by emotions. The particular emotion being fear of insecurity of future accommodation - which is ironic because, having failed to take the possibility of higher interest rates into account, they may now be facing - or about to face - unaffordable mortgage costs leading to mortgage stress and thus back to fear of insecurity of future accommodation.
Other have argued here that it was 'the' rational choice - but that doesn't make it a prudent one. Inasmuch as it sucks paying dead money in rent with the risk of future homelessness (largely a non-event if you stick to fixed-term tenancies), it sucks even more paying dead money in interest while facing the risk of future homelessness plus massive debt - especially if job security is tenuous.
The interesting thing here is both labour and national are either blind to what is coming out of China and other trading partners or they are not willing to be upfront with the voter. This is the first election where I don't believe either of the mainstream parties have what it takes to prepare NZ population for what is coming.
Things are going to be very different next year and our economic hole will be far far deeper than anyone is saying right now.
I suspect nationals 4 tax increases will be expanded while their proposed tax cuts will be deferred until 2026 in an effort to fill that hole.
God help us if Act gets any leverage. Best option is National/NZ First minority government.
We are going to be screwed whoever we vote for. A labour government is definitely the worse option but a national government will not be the cure many think it could be.
Pay down your debt and hold on to your job because it's going to get very ugly in 2024.
The interesting thing here is both labour and national are either blind to what is coming out of China and other trading partners or they are not willing to be upfront with the voter.
The future is very hard to predict, so there's issues freaking out at each and every potential storm on the horizon.
Regardless, I'm not sure what any government of ours could do to counter a potential global slowdown over the next 12-24 months.
More likely they'll wait till things turn custard, then embark on either public works or some sort of economic stimulus.
There are some definition issues for me. What I'd like to see in the above analysis is what if all the 90d, ostensibly not impaired, go belly up plus the actual impaired mortgages which I take it to mean are belly up (and the banks have to foreclose) against the total capital available by the banks. Put another way, can the banks take this hit without RBNZ having to declare an OBR event. I'm aware that an OBR event is on an individual bank event but since impairments are not bank individualised in this articel, I'm looking for an overall state of the banks capital ratios.
Not as informative as I would expect.
RBNZ regulate the capital ratio at 8% don't they? So if you follow the link in the article, $550b @ 8% = $44b capital?
Total non-performing $2.8b
2.8/44 is 6.3%, though they'll take what they can get from the sale of the properties, still a fair amount of that is business and personal loans. Things aren't too dire at the minute.
What's interesting is that the capital requirements are increasing, while the exposure on their current capital is also increasing. So it's no wonder we're seeing TD rates sitting within half a percent of interest rates. The banks desperately need to raise capital.
Interestingly, though anecdotal, I've seen more sold signs this month in my area than in the last 6 months.
So some segment is buying, wont see the actual sale prices for a while so don't know if it's the sellers meeting the market, the last 2 were not on the market for long(couple of weeks) and there are still some houses unsold.
Could be the flow though from immigration.
A property around the corner from me has been on the market for coming up 3 months. 4 bedroom on 1/4 acre, very close to schools and train.
Desirable property that would have been snapped up 2 years ago. They're asking ~5% above 2020 RV and ~5% less than the lower limit of the homes estimate range.
I've just listed a brick and tile house for auction in Auckland. It's deceased estate, flexible settlement terms and harbour views.
It's been busy, 2,000 hits on one of the websites it's listed on, and 13 turned up for the first open home.
The agent described the interest as 'crazy'.
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