ANZ records strongest March quarter residential mortgage growth by volume, ASB posts largest percentage increase

ANZ records strongest March quarter residential mortgage growth by volume, ASB posts largest percentage increase

By Gareth Vaughan

ANZ New Zealand recorded the highest residential mortgage volume growth in the March quarter, but ASB recorded the strongest percentage growth, the big five banks' latest General Disclosure Statements reveal.

ANZ grew home loans by NZ$843 million, or 1.6%, in the three months to March 31 to NZ$54.798 billion. Of the growth 70%, or NZ$591 million, came in loans where the borrower has a deposit, or equity in their property, of at least 20%. That leaves the overall percentage of ANZ's home loans, by value, at loan-to-value ratios (LVRs) above 80% unchanged at 24%.

In terms of the percentage growth, ASB came out on top with 2% growth, and was easily the bank with the highest percentage of high LVR lending. Of ASB's $791 million quarterly growth, $565 million, or 71%, came in lending where the borrower has a deposit, or equity in their property, of less than 20%. ASB now has 22% of its residential mortgages by value at LVRs above 80%.

Based on Reserve Bank sector credit data, the overall residential mortgage market grew at about 1.5% in the March quarter, or by $2.7 billion to $180.420 billion.

Bank Volume growth Percentage growth Percentage of growth in high LVR loans
ANZ  $843 million  1.6%  30%
ASB  $791 million  2.0%  71%
Westpac  $571 million  1.6%   8%
BNZ  $455 million  1.6%  35%
Kiwibank  $160 million  1.3%  5%

Banks have been offering everything from TVs, iPads and vouchers for groceries or petrol with their home loans as they strive to entice borrowers to pick them over their rivals. Against a backdrop of a low growth market, refinancing business - or customers switching between banks - has become a key feature of the market even though mortgage growth has been picking up. The annualised growth rate of 4.6% for the year to March was the highest since 5.1% in November 2008, although it's still well down on the double digit growth recorded between 2003 and 2008, which peaked at 17.4% in April 2004. Separate Reserve Bank data is showing the value of weekly mortgage approvals consistently topping NZ$1 billion, suggesting lots of refinancing.

High LVR lending has also come under more focus following recent regulatory moves.

The Reserve Bank will make the big four banks hold an average of 12% more capital against their housing loans from September 30, which it says is to cover potential losses from high LVR lending. This adds up to about NZ$500 million between them, or the equivalent of NZ$125 million each. The Reserve Bank recently said about 30% of all new residential mortgage lending was at LVRs over 80%, up from about 25% in late 2011 and early 2012.

And in a Budget announcement earlier this month, Finance Minister Bill English and Reserve Bank Governor Graeme Wheeler signed a memorandum of understanding clearing the way for the Reserve Bank to use its so-called macro-prudential tools, if it chooses to, on a temporary basis to dampen excessive growth in credit and asset prices and strengthen the financial system. The four tools include the potential for the Reserve Bank to introduce restrictions on the share of high LVR residential mortgages being made by banks.

See our story on ASB's March quarter here, BNZ's here and Westpac's here.

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?

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What are we really mortgages for new houses...or just the deck chairs being moved around the bubble..

What new houses Wolly?
Residential contruction of New houses is almost non existent.
The building numbers now include Retirement Units and Apartments, even with them roped in the house construction numbers are at 50% what they were in 2007.
These mortgage numbers will flow back and forward as banks lure customers one month and loose them the next.
Until we start building Affordable Housing so young people, heck everyone, can take a step on the first rung of the Housing ladder then the biggest building project ever will be Government Social Rental Housing.
Ask yourself Wolly, when did you last see a small affordable home being built for home ownership or private rental.
The privatre rental stock is growing thin and expensive, get ready for residential long term leases and no simple rental stock.
Bidding on these leases generally involve 6month, 12 month and 24 month commitments.
some freinds in Auckland tell me Residential Leases are already in place, if you cant commit to 18months dont bother applying.

Hi Gareth,
Where did you get NZ$54.798 billion from?
From what I can see total Mortgage Lending exposure in the March 2013 GDS is $52.115 billion and in the December 2012 GDS $52.224 billion.
Is there something i'm missing?

I use the 'on-balance sheet' figures from the 'residential mortgages by loan-to-valuation ratio' disclosure. Cheers.

Thanks for the quick reply.
I am looking at the disclosure statements at the moment and I can't seem to find the NZ$54.798 billion listed in the article anywhere.
The March 2013 total 'on-balance sheet' figures from the 'residential mortgages by loan-to-valuation ratio' section is listed as $45.325 billion and the same December 2012 measure is listed as $45.390 billion.

Are you looking in the ANZ Banking Group Ltd - NZ Branch GDS?

No, the ANZ Bank New Zealand Limited Disclosure statement found here: Why the preference for the ANZ Banking Group Ltd - NZ Branch GDS? Any idea why there would be a difference between the two?

ANZ is a dual-registered bank. The locally incorported bank, ANZ Bank NZ Ltd - the bank you and I deal with, sells loans to the branch Bank, ANZ Banking Group. ANZBG is effectively a 'wholesale' bank that has access to cheaper funding via the Australian parent than the standalone locally incorporated bank.

Ok, cheers for the reply



FYI, I have updated the table in this story to include a column on the percentage of growth at each bank that came in high LVR lending.

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