Weekly home loan approvals reach NZ$1.3 bln, the highest value for 3yrs with volumes at highest level in almost 3yrs, Reserve Bank data shows

Weekly home loan approvals reach NZ$1.3 bln, the highest value for 3yrs with volumes at highest level in almost 3yrs, Reserve Bank data shows

By Gareth Vaughan

More home loans were approved last week than in any week since June 2009 with the value of mortgages approved topping NZ$1.3 billion, the highest level since April 2009, Reserve Bank data shows.

The central bank's weekly mortgage approval data shows 7,245 mortgages were approved in the week ended March 30 valued at NZ$1.302 billion. The last time the volume was higher was 7,395 approvals in the week ended June 19, 2009, and the last time the value was greater was NZ$1.346 billion in the week ended April 3, 2009.

The weekly volume was up 18% year-on-year based on a comparison of the most recent 13 weeks of data to the same 13 weeks last year, with the value up 40%.

The figures for the week to March 30 continues a recent resurgence with the volume of approvals topping 7,000 (valued at NZ$1.165 billion) for the first time since September 2009 as recently as the week to March 16.

However to give some longer-term context, by volume the highest number of weekly approvals is 11,193 in the week ended December 15, 2006 and the highest value recorded - since the Reserve Bank started tracking the data in October 2003 - is NZ$1.542 billion in the week to March 16, 2007.

The latest weekly Reserve Bank data comes with Barfoot & Thompson, Auckland's biggest real estate firm, saying it sold more houses during March - 1,246 - than in any month for five years with the average price up 6.5% from February but down 1.7% from March 2011. It also comes against a backdrop of three of the big five banks - ASB, BNZ and Westpac - growing their home loans with loan-to-valuation ratios over 90%.

The Reserve Bank defines a mortgage 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.

Included in the data is the refinancing of other banks customers, any loan where the security changes, and any loan where the liability holder changes. Excluded is own customer refinance, business borrowing where the security is the owner’s home, and when the underlying value of a loan is “topped up," with only the topped up portion included. See more detail in the Reserve Bank's description of the data series here.

This article was first published in our email for paid subscribers this morning. See here for more details and to subscribe.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

5 Comments

April should see a significant increase in house sales volume with that amount of approvals being granted! Or are these mortgage approvals just a reflection of refinancing as banks compete hard in an effort to convert business from one Aussie banks customers to another?

Growth is always strongest before the inflection point.
 
My analysis: seasonally adjusted volumes are about 2 months away from peaking, if they haven't done so already.  Year on year changes in house prices tend to lag YoY changes in SA volumes by about 4-5 months, so there may continue to be some support or upword pressure on prices for the first part of the year, but doward pressure thereafter.  At the end of this CY prices will likely be lower than in the preceeding year.
 
Write it down, Vaughn and Hickey, today Keyser didn't accuse you of being too overly anti housing (you were, and look at where the market is now), and thinks property bulls are somewhat foolish.
 
Not as fooling as Xero shareholders buying at $4.00, but still foolish.
 
Have great Easter.  Toodles.
 

This phenomenon is easily explained , right now its significantly cheaper to "rent" your home from an Australian Bank than a Kiwi Landlord
Long may it last. 
 

GV are you sure, have you got any settlement numbers to match.
Look at the banks posters: Pre-purchase approvals viable for 6 mths. Deals for switching loans from other banks.
 
Have been on the coast for the weekend, and seen real estate windows with comments:
Vendor price reduction
Mortgagee sale
Bank said sell this first
Deadline sale
Vendors dream home plans abandoned
etc., etc.

The "home loan approvals" figure doesn't really give us any useful information without some clear indication of the intentions of the potential mortgagors. More indicative is the rate of rise or fall of the total value of registered mortgage securities. Even that figure demands some analysis. A banner headline for approvals without context is a bit wispy.