By Gareth Vaughan
The volume of weekly mortgage approvals exceeded 8,000 in the week before Christmas for the first time in more than three and a half years, Reserve Bank data shows.
Mortgage approval figures for the past four weeks were released yesterday afternoon by the central bank. They show approvals in the week ended December 21 hit 8,299, which was up 23.5% year-on-year based on a comparison of the most recent 13 weeks of data versus the same 13 weeks in 2011. Their combined value was NZ$1.347 billion, up 34.9%. The last time the volume of weekly approvals topped 8,000 was in the week ended April 3, 2009 when a whopping 10,843 home loans were approved.
And figures for the most recent week, ending January 11, 2013, show 4,971 approvals valued at NZ$738 million, giving annual increases by volume of 21% and 31.5% by value. The past three weeks, covering Christmas and the peek summer holiday season, have snapped a record breaking run of 36 consecutive weeks where the value of mortgage approvals topped NZ$1 billion.
The NZ$252 million worth approved in the week to December 28, an annual increase of 34.3%, was the first time the value of weekly approvals has slipped below NZ$1 billion since NZ$868 million worth of loans were approved in the week ended April 13 last year, a week that included Easter Monday.
The Reserve Bank started compiling mortgage approval data in October 2003 and the previous longest NZ$1 billion plus run was 20 weeks during 2006. The record weekly high for volume of approvals is 11,193 in the week to December 15, 2006, and the record high for value is NZ$1.542 billion in the week ending March 16, 2007.
Despite the strong run of mortgage approvals through most of 2012, against a backdrop of historically low interest rates, the overall housing loan market is growing relatively slowly suggesting a lot of refinancing activity and customers switching between banks.
Based on Reserve Bank sector credit data, housing loans stood at NZ$177.133 billion at the end of November, which was up 3.4% year-on-year, and up NZ$934 million, or about 0.50%, month-on-month. Double digit growth rates were recorded between 2003 and 2008, peaking at 17.4% in April 2004.
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. See here for more details and to subscribe.