By Gareth Vaughan
ASB, reticent in the past to lend on a high loan-to-valuation-ratio (LVR) basis to borrowers' purchasing apartments, has relaxed this policy for selected customers and is now prepared to lend around 90% of the purchase price, mortgage brokers say.
From being prepared to lend 70% of the money required for an apartment purchase, or even just 50% in the case of some smaller apartments, ASB is now prepared to go to 90%. However, mortgage brokers say the bank has not implemented this as a blanket policy, but rather will only do it for the "right clients."
"It's smart stuff. What they're doing is looking at the quality of the property, the quality of the client and doing an individual assessment, rather than a one size fits all approach. I wouldn't call that crazy credit policy, I'd actually call it quite smart. It's a lot more considered, but I guess you could say it has loosened up a bit," one mortgage broker, who didn't want to be named, said.
In comments attributed to Shaun Drylie, its general manager for retail products and strategy, ASB didn't specifically address interest.co.nz's question of whether it was now prepared to do 90% loans on apartments.
“We are constantly reviewing our lending criteria to ensure it remains appropriate," Drylie said.
"Every customer is assessed on a case-by-case basis depending on the individual borrower's circumstances. As a guideline, approval for loans on apartments will take into account a variety of factors including a borrower's ability to repay or service the loan repayments and the amount of their deposit and will also consider the size of the apartment, the size of the apartment building, and whether it is a purpose-built apartment or a conversion," he added.
Banks have been more nervous about lending on apartments in Auckland than houses following well documented leaky homes woes and losses on loans to overseas apartment buyers.
News of ASB opening up to higher LVR apartment lending comes after the bank's CEO Barbara Chapman told interest.co.nz last month that she wanted to grow ASB's home loan book in the year to June 2013. This came after parent Commonwealth Bank of Australia said its share of New Zealand housing lending fell to 21.6% at June 30 from 22.1% a year earlier.
Anecdotally some mortgage brokers say that after a super aggressive ANZ National Bank hoovered up NZ$1 billion worth of home lending in the June quarter, ASB has now come to the party and will likely record strong growth in the current, September, quarter.
"They (ASB) are defiantly on a bit of a surge," said one mortgage broker.
A good chunk of ANZ's June quarter growth is likely to have come from winning business off other banks given, according to Reserve Bank sector credit data, industry wide housing loans rose NZ$1.545 billion, or just 0.88%, to NZ$175.789 billion in the three months to June 30.
Speaking about the housing market more broadly, Drylie said ASB was ensuring it continued to offer competitive home loans in a tight market. Last month Chapman said ASB had been recording above market growth in its ASB branded residential mortgage book and was working to turn around its third party mortgage book, business it gets via Sovereign. Drylie added that over the past few months ASB had been "engaging with" its broker network and focusing on improving the customer service experience.
"This has seen improved levels of business in ASB's third party mortgage book,” he said.
This article was first published in our email for paid subscribers this morning. See here for more details and to subscribe.