By Gareth Vaughan
The percentage of Kiwibank's net* home loan growth from high loan-to-value ratio (LVR) mortgages grew in the September quarter from the previous quarter, and exceeded the Reserve Bank's 10% limit introduced immediately after the September quarter on October 1.
Figures from Kiwibank's latest General Disclosure Statement (GDS) show the bank recorded net residential mortgage growth of $234 million in the three months to September 30, or 1.8%, to $12.705 billion. Of this $34 million, or 15%, came from high LVR lending. This was despite a $10 million drop over the quarter to $483 million in Kiwibank's high LVR lending through the Crown's Welcome Home Loan scheme, which is exempt from the Reserve Bank restrictions.
The Reserve Bank announced on August 20 banks must restrict new residential mortgage lending at LVRs of over 80% to no more than 10% of the dollar value of their new housing lending flows from October 1. Allowing for exemptions, the Reserve Bank estimates this 10% "speed limit" will effectively restrict banks’ high LVR lending flows to about 15% of their new residential lending. The banks will be tested, on a rolling six month basis, on March 31 next year.
The latest figures mean 18.77% of Kiwibank's residential mortgage book is at high LVRs, down from 18.85% at June 30. In the June quarter just $17 million, or 7%, of Kiwibank's $235 million net home loan growth came from high LVR lending.
Kiwibank's the second of the big five banks to issue a September quarter GDS. The first, ASB, recorded net residential mortgage growth of $581 million, or 1.4%, to $40.865 billion. Of ASB's net growth, $230 million, or 40%, stemmed from high LVR loans.
*Net growth figures differ from the RBNZ "speed limits", which are a share of new commitments. However, they're the only publicly available figure for individual banks.
This article was first published in our email for paid subscribers. See here for more details and to subscribe.
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.