By David Hargreaves
The seemingly ever-quickening pace of household debt growth is showing tentative signs of at least levelling off in the wake of introduction by the Reserve Bank of the latest round of LVR measures.
The RBNZ's monthly sector credit figures for September show that total household claims (mostly mortgages, but also including consumer finance) rose a seasonally-adjusted 0.8% to $242.132 billion in September $240.370 billion in August. The 0.8% rise is the same as that seen between July and August, but down from 0.9% between June and July.
However, the annual rate of rise has just edged up again to 8.8% from 8.7% as of August. The rate of growth appears as if it's slowing, but that latest figure is still the highest seen since mid 2008 at the end of the last housing boom.
In terms of just mortgages, the total rose during September by nearly $1.6 billion to $226.559 billion, making for an annual increase of 9.2% - the same as recorded in the previous month. This is the first time since late 2014 that the annual rate of growth has not increased from one month to the next.
However the rate of credit growth is for now still far outpacing that of deposit growth - savings.
Deposit growth slows
Separately, the RBNZ's household deposits figures for September showed that during the month the amounts invested with banks rose by nearly $1 billion to $157.965 billion, which was the biggest monthly increase since April.
The rise will be welcomed by the banks after recent stagnating of deposit figures and signs that the banks are getting squeezed and having to compete strongly for funds.
The annual rate of growth in total household deposits continued to slide though, down to 6.7% from 7.8% in August and from double figures in the first half of the year.
In terms of the household borrowing figures, the RBNZ will be pleased to see signs that the rate of growth in them is slowing.
The central bank becomes concerned when individuals borrow at accelerated levels, potentially posing a future threat to financial stability.
5 Comments
Your headline:
"New figures indicate the latest RBNZ housing measures may be starting to have some impact on the growth rate of household borrowing"
Your justification:
"However, the annual rate of rise has just edged up again to 8.8%In terms of just mortgages"
"The total rose during September by nearly $1.6 billion to $226.559 billion, making for an annual increase of 9.2% - the same as recorded in the previous month. This is the first time since late 2014 that the annual rate of growth has increased from one month to the next"
??? Well which is it ???
S8 - the asset side of the mortgage ledgers.
In broad terms, the Basel regime meant to define a bank by its assets. That was the idea behind “risk buckets” where those were thought an easy glance to determine what a bank was doing and whether it warranted any concern. What actually happened was quite different, disastrously so. Regulations designed to help the public determine easy comparison to other banks instead was used by banks to hide their riskiness as if they weren’t being risky at all (subprime mortgage structures rated AAA that were given favorable RWA treatment, and thus were made to seem low risk when nobody actually knew any of the risks). Insane complexity further obscured what was thought a straight-forward design. Read more
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