Residential mortgage approvals by value rose in value to near the NZ$1 billion mark last week, their highest level since April 2009, according to Reserve Bank data.
The central bank's latest mortgage approvals figures show NZ$966 million worth were approved in the week to Friday, November 25. That's the highest weekly value approved since NZ$1.346 billion in the week ended April 3, 2009.
By volume, at 6,112, last week saw the highest number of approvals since 6,878 in the week to December 18, 2009.
By volume the approvals are up 8.2% on an annual basis based on a comparison of the most recent 13 weeks of data to the same 13 weeks in the previous year, with the value up 28.8% on the same basis. The figures for the previous week, ended November 18, were 5,917 approvals valued at NZ$938 million.
The strong week for mortgage approvals - compared with the last two and a half years' data - comes with economists at ASB and ANZ now predicting the Reserve Bank won't increase the Official Cash Rate from its current level of 2.5% until December 2012 because of the uncertainty over the economic outlook created by the European sovereign debt crisis.
There are also signs of growing competition in home loan lending rates with Kiwibank recently launching a six month mortgage 'special' at 4.99%, the lowest advertised interest rate the bank has ever offered, which significantly undercuts the advertised six month rates from its main rivals. See all bank advertised mortgage rates here.
The latest Reserve Bank sector credit figures show slow growth in housing loans, up 1.2% year-on-year in October to NZ$173.010 billion and up just NZ$127 million month-on-month from September.
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. Seven banks respond to the Reserve Bank's survey, between them representing 99% of registered bank lending for housing, and about 94% of total housing lending.
Excluded from the data is the ‘rolling over’ of a fixed rate loan, and its subsequent refinancing, business borrowing where the security is the owner’s home, and where the underlying value of a loan is “topped up”, only the topped up portion is included.
Included by the Reserve Bank is the refinancing of other banks' customers If a loan is refinanced using a different bank, any loan where the security changes, and any loan where the liability holder changes If an existing mortgage held by an individual is incorporated into a family trust or other special purpose vehicle.
Towards the end of the global cheap credit bubble in December 2006, the volume of weekly mortgage approvals twice topped 11,000 with the value over NZ$1.4 billion.