Weekly mortgage approvals reach year highs by both total and average value as life returns to housing market

Weekly mortgage approvals reach year highs by both total and average value as life returns to housing market

By Gareth Vaughan

Weekly residential mortgage approvals rose to their highest overall value and highest average value this year last week as the housing market starts to show some flickers of life.

Reserve Bank data shows 5,714 mortgages were approved in the week to December 3 worth a total of NZ$789.1 million or an average of just over NZ$138,000 each. The latest weekly figures follow those for the week to November 26 where the value of approvals hit NZ$742.9 million, the highest level since May 21.

Meanwhile, Realestate.co.nz reported a seasonally adjusted 7% rise in new listings during November to their highest level for any one month since June 2008 and the highest November since 2007. And Auckland's largest real estate agency, Barfoot and Thompson, says it sold 668 properties in November, up 19.1% from October.

Barfoot and Thompson noted a surge in sales of luxury houses which comes as the latest weekly Reserve Bank figures show a trend of rising average mortgage values (see our chart below).

The rise in mortgage approvals comes as the new CEO of ANZ, the country's biggest bank, puts out a message that his bank is 'back in the game" with its "doors open" for business. David Hisco, who replaced Jenny Fagg as ANZ New Zealand CEO in September, also says ANZ has  "reviewed" some lending criteria. This has included "loosening a little" in the above 80% loan to valuation ratio category.

Hisco's comments come after ANZ's September quarter General Disclosure Statement showed ANZ, which also owns the National Bank, wrote more home loan business in the September quarter than in any quarter since June 2008 with its housing term loan book increasing by NZ$317 million.

For new residential loans ANZ and National have been offering to pay up to NZ$1,000 towards customers’ legal costs and waive the application fee for mortgage applications received and approved between October 3 and November 30 and settled by December 31.

The ANZ and National banks have also been offering mortgage brokers an extra 0.10% bonus commission for applications received and approved between October 3 and November 30 and settled by year’s end. They say new residential lending must top NZ$50,000 in value for borrowers to be eligible.

ASB and Westpac have also offered spring specials to try and entice home buyers into the market and have been incentivising mortgage brokers to bring them business.

The mortgage approval growth also comes after several banks, led by Kiwibank, trimmed some fixed-term mortgages in an attempt to spice up demand in a what was a quiet spring housing market. See all mortgage rates here.

Nonetheless, despite the lift mortgages approvals for the week to December 3 are still down nearly 22% by volume and almost 23% by value year-on-year based on comparing the most recent 13 weeks of data to the same 13 weeks last year.

The Reserve Bank data 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. Seven banks respond to the central bank's survey representing about 94% of total housing lending.

The series excludes banks' 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, the underlying value of a loan being “topped up” and when a loan is topped up with extra borrowing only the topped up portion is included.

Included in the data is the refinancing of other banks' customers, loans refinanced using a different bank, any loan where the security changes, borrowers selling property where the loan is secured against and purchases another, any loan where the liability holder changes, and existing mortgages held by individuals being incorporated into a family trust or other such special purpose vehicle.

* This article was first published in our email for paid subscribers earlier today.  See here for more details and to subscribe.

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22 Comments

Lets get this party started.

The party is actually over ,SK...but there's just time for 'one more for the road' for those who have had too much, already...

"It ( the RBNZ) also forecast house prices would continue to fall through 2011 because prices remained expensive relative to incomes and rents... It forecast house prices would bottom out in late 2011 before recovering to 2009 levels by 2013."  

That's quite a while to wait for the party to get going again, don't you think?

Not sure how Grey Lynn prices can 'continue' to fall when they rose 14.8% in the last 2 years.

Quick, you should get in on this, before it's too late:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1069...

An investor as astute, savvy and discriminating as yourself is guaranteed to do well.

Easy!, SK. It's called 'a trend'. Here's a little example from our hottest investor property market. Now I don't know if Grey Lynn is like QT, but a 23% 'blip' in Oct. '09 versus Oct '07 ( also... two years), has been followed by a "return to normal service".

http://unconditional.co.nz/files/2010/08/Queenstown_lakes_property_prices_July_2010.png

wherae is the line on the end of the gragh heading in your opinion Nicholas?

I suspect some NI town graghs have the end of the line going nearly vertically down!!

61.8% less than the high of $560k ~ so down to...about $215k. So about levels seen in 1993.

"2009 levels by 2013"?

No.

No more than 2000 levels by 2013, probably even lower.

Unless of course New Zealanders all suddenly receive massive income increases and the cost-of-living miraculously falls back to where it was around 1989.

You must be the guy that goes home early, before the action really hots up and everyone gets properly lubricated.

Nope. I'm th one who knew when he'd had enough ( that was about three years ago), and could drive home without getting killed on the way from over-lubrication....

KiwiSaver.

Three years have elapsed and some people are withdrawing their money to use as house deposits.

"Barfoot and Thompson noted a surge in sales of luxury houses"

Who bought these properties?  Overseas buyers?

more to the point "what did they sell for"

That piece of information would be priceless

Alot of smoke and mirror work goes into skewing medians upwards whereas the reality is at the moment that many vendors(and there banks ) are desperate and prices are set to plummet----after Christmas

Dead cat bounce.

Boatman & me did some research on this already  : Unless you freeze  it first , the dead cat will go splat ! They don't bounce ............ Not off the 23'rd floor of a certain building in Christchurch anyway .............. Ummmmm , so we were told .......... Yup !

Ha.

Ha.

Ha.

Rates are on the way up overseas and NZ cannot escape the net. Those borrowing now had better be prepared for 10% plus over an extended time period. The worst of this has yet to hit.

 

‘House prices still over-valued’

It also forecast house prices would continue to fall through 2011 because prices remained expensive relative to incomes and rents.

“This overvaluation, along with some gradual increase in mortgage interest rates, is expected to see house prices rise only gradually beyond 2011,” it said. It forecast house prices would bottom out in late 2011 before recovering to 2009 levels by 2013.

Prices would, however remain below their late 2007 peaks.

from bollard the reserve bank governor, today..says it all really!!

DEAD CAT BOUNCE defined as a scenario where a market which has fallen rebounds briefly before falling further below its last low-point .

The horrible reality is that the market is being stimulated by the lowest interst rates in the past 60 years , but the current cost of borrowed money is unsustainable.

Anyone rushing into borrowing big money is looking for trouble.

Good one RJ!...... on "what did they sell for". 

A property sold in Epsom for NZ$1.4 million in mid 2008 sold for NZ$1.0 million in Nov. 2010. Wow, B&T have sold another luxury home......hurray....... No wonder the B&T numbers are always a BS spin!

A good Hong Kong businessman once said on T.V. " No matter how far and what height an aeroplane flys, it still have to come back to ground before taking off again ". The Hong Kong property crashed 50-60% after that because investors thought they could continue flying above Hong Kong ........... a place with very limited land. History does repeat.

Talk about 'dead cats' the Irish, Spanish, Greek to name a few over here, are more like Dead Ducks, regards the falling property values. As for the kiwi pavlovia paradise, house and 1/4 acre or should that be 450m2 I say...... Captain speaking, Put your seats in the upright position fasten your belts this could be a rough landing, but one way or another we going to have you on the ground soon.

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