Almost $1b of mortgages approved last week

Property

Mortgage approvals by volume hit highest level in nearly 2 years and highest level by value since April 2009

30th Nov 11, 4:04pm by Gareth Vaughan

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.

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31 Comments

by Chairman Moa | 30th Nov 11, 4:11pm 1322622662

Wow..!! That's is 4000 mortgages of $250K

we are sheeps...just follow the guy in front !

nek minit

by skudiv | 30th Nov 11, 6:10pm 1322629813

6,112 mortgages at 158k.

by Realistic view | 30th Nov 11, 4:17pm 1322623054

Unbelievable, the rest of the world’s going down the drain because of too much debt yet here in NZ we are still racking it up. The only conclusion can be that we are ignorant of what the long term effect of this is going to be. Yet how can that be when we have the examples of Greece, Ireland etc. happening now in real time. The country’s quite literally gone mad.

This is not going to end well!!

by MortgageBelt | 30th Nov 11, 4:18pm 1322623127

Never been cheaper to enjoy the benefits of home ownership.

I think 5.6% is the lowest rate experienced in over 25 years in NZ. Now that the economists have stopped going on about imminent rises.

Would be interesting to know the %age of floating with new loans in the last 3 or 6 months.

by scarfie | 30th Nov 11, 4:32pm 1322623920

That is the trouble with property spruikers, they can't think past 25 years.

by MortgageBelt | 30th Nov 11, 4:52pm 1322625164

Well, your lifespan is only 70 - 80 years all going well.

by Frazcam | 30th Nov 11, 4:22pm 1322623334

Well were approved today, but for less than what we wanted with loads of strings attached.

by Kate | 30th Nov 11, 4:32pm 1322623976

What kind of strings?

by Frazcam | 30th Nov 11, 4:48pm 1322624933

Well conditions - we have other properties and they have been 'taken into account' on the loan. Plenty of equity is what the banks are after.

by Kate | 30th Nov 11, 4:31pm 1322623917

Perhaps sellers are becoming more realistic. We certainly see plenty being listed at below current RV. As long as everyone anticipates asset deflation, the market might get going again to take advantage of the low rates.

The Mexican standoff had to end sometime.

by Tim | 4th Dec 11, 4:53pm 1322970825

Most commenters wanting vendors to be 'realistic' are actually buyers being unrealistic.

by steven | 4th Dec 11, 5:47pm 1322974050

To start with you look at inventory and the amount of houses taken off the market becasue they dont reach what the vendor thinks they are worth, or what the vendor paid and the vendor doesnt want to take a loss, most of which seems imaginary.

So in most of NZ house prices are stagnant and when you look at core inflation of 2% are probably losing capital value.....plus teh risk of owning a 59% or more over-valued property with the second Great Depression looming.......

Both sides are stupid right now IMHO just in different ways.

regards

by SK | 30th Nov 11, 4:33pm 1322624016

No suprise really when rates are at record lows - and most people are in a job.

by James M | 30th Nov 11, 4:44pm 1322624641

We had our pre-approvals renewed last week (originally only valid for 3 mths). I wonder if that counts as a mortgage "approval". We also have pre-approval with two banks (one at 5%, one at 5.25% - neither of them Kiwibank) - so wonder if they're counting both of those in the figures mentioned?

Not planning on doing anything with them as yet, just keeping then current.

Only strings on both were that we weren't buying leaky homes etc (and both banks agreed to give us free valuations and $1k towards legal fees).

Banks obviously have too much money to give away.

by SK | 30th Nov 11, 5:07pm 1322626078

What are the terms of the 5% loan?

by James M | 1st Dec 11, 8:36am 1322681772

Nothing significant - it's a 0.6% discount that Westpac was offering on their standard floating rate. There weren't really any conditions - told the lending/mortgage manager that ASB had offered us 5.25% and he used his discretion to authorise that discount. We do have a certain amount of cash in the bank, however we have <20% of the amount approved.

by Chairman Moa | 30th Nov 11, 4:46pm 1322624807

That's it, time to sell up and call Australia home!

(PS. Aussie's latest S&P's AAA rating - can't go wrong and hope it rubs onto NZ)

by MortgageBelt | 30th Nov 11, 4:48pm 1322624923

We sold & bought last year into a better quality home - due to a declining market you can upgrade easier [ie the gap is less] (within prudent borrowing limits of course).

by kane02 | 30th Nov 11, 4:51pm 1322625111

that's not new lend, it's refinancing between the banks as they try to undercut each other which is good for the end user.

by Wolly | 30th Nov 11, 4:52pm 1322625146

Read the small print....and wonder what the impact of the refi...the sec changes....and the other changes!....why are we not told of the impact....the data release is misleading..WHY

"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."

by skudiv | 30th Nov 11, 6:18pm 1322630308

Taking into account that there has been a push to make it easier to change banks. Lies, damned lies, and statistics. Its great news though, the economy must be booming. Forcarsters are all saying rates will be low for a long time, must be about due for a rise then. With so many different solutions to the Euro crisis comming out every week surely one of them must work, or even better they all will work, together. Building a brighter future.

by Kate | 30th Nov 11, 9:52pm 1322643146

any loan where the liability holder changes If an existing mortgage held by an individual is incorporated into a family trust

Well then the spike might just be all those folks gifting the whole house to the family trust!

by SK | 30th Nov 11, 5:07pm 1322626023

What are the terms of the 5% loan?

by Justice | 30th Nov 11, 7:13pm 1322633630

optimism can be blinding of the truth

by SK | 30th Nov 11, 7:17pm 1322633837

That is soo well said.

by Basel Brush III | 30th Nov 11, 8:46pm 1322639170

Now that Bollard has his mate John Key back in the chair he should be able to put a bit of pressure on this gaping sore. Will he ever?

Get those LTVs down and re-assess the CFR.

The only way will get anywhere is when the banks start to cry foul

Getting the source of funds from local lenders more in line with real lending demand would do a lot to sort out the mess.

by boofta | 1st Dec 11, 6:41am 1322674893

Its all smoke and mirrors

Extrapolate the facts from conjecture, and the current situation is no better than that reported previously by Interst.co.nz. Like skudiv said the average mortgage taken out is $158K, which doesnt buy Jack even in this depressive economic climate.

You dont have to be a rocket scientist to work out that new first home buyers are still in the minority, with I suspect the majority of the mortgages being buyers and owners re-positioning themselves in the lead up to the Reserve Bank increasing the OCR, which has consistantly been mooted all year, but has never eventuated.

Until such time the economy spikes, first home buyers will continue to be cautious, with many existing owners repositioning themselves in the market, iand either remodelling/refurbishing as opposed to moving onto greener pastures and purchasing new properties.

by Wolly | 1st Dec 11, 7:03am 1322676188

There will be no "spike" boofta.....not in a lifetime. The new game is for the Fed to print to feed the Banks in the european bond hole and for the ECB to feed the IMF to ensure it also feeds the bond hole and to have the swiss RB and the BoE to lend a hand in printing to feed the hole...it's all about faking an ability to fill the hole.....but the hole cannot be filled.

Meanwhile the media are in on the gameplay....the fires are being stoked with utter rubbish about recovery and solutions and action this day....a bit like Chamberlain waving the bit of paper...."Peace in our time"........"market stability in our time"......humbug.

Meanwhile down here the RBNZ will continue to be jerked every which way by the owners of the economy and the fools in the Beehive will toe the line...How's it feel to be a Kiwi serf to an Aussie bank boofta?

by boofta | 1st Dec 11, 7:46am 1322678795

Wolly - Not a sheep I take it?

I am the eternal optimist - a spike will happen in my life time. I hope.

From your comment I take it you are in yoyr 70's. If this is the case I would have to agree with you whole heartedly, and that you may not possibly see it.

Yes what is happening overseas is scarey, and until a relaistic economic solution is found to the worlds economic troubles, and we get off the merry go round and shuffling money from one insolvent country to another to prop it up, we (the world) are in dire straights.

I would therfore take it that you are a proponent of doing away with a "paper economy" and that I should get into commodities.

Ultimately though, I agree with your sentiments and pessimism, that it wil take a hell of a long time to get ourselves out of this hole - Its a long way up when youre trying to get to the top and the sides keep caving in.

On the matter of the Banks - I say #@&% em all, whether thay are Aussie owned or not, but in concluding I hear that the Chineese are buying up all your mines, and selling it back to you Aussies.

I suspect Wolly, that you wont be wooly for to much longer

by blue maomao | 1st Dec 11, 10:09pm 1322730555

A basic layman's question:

Where are the banks getting all this money to lend to people?

I mean in the present evironment where Europe is financially stuffed, ditto the US, ditto UK.

Where domestic savings in NZ and Aus is miniscule enough to completely dismiss as a source.

Serious question - where is the money coming from? China? India? Africa?? Saudi???

it's got me beat.

by Rob | 3rd Dec 11, 10:38pm 1322905084

China? They are lending it, and then expecting people to use it to buy more of their stuff. Its a bit like a drug habit. The problem with china is that they aren't buying enough from around the world.