New Zealand Banking Association’s revealed almost 30 percent more home loans were taken out from June to December 2023, than the previous six months.

The number of new home loans increased by nearly 30% in the six months to December 2023 according to retail banking insights released today by the New Zealand Banking Association.

There were 52,504 new home loans from June to December, which is an increase of 29.8% compared to 40,438 new loans in the previous six months. Of the new loans, 26.3% went to first home buyers, with the rest going to existing customers opening new loans, for example, to move a new house, to borrow for renovations or split existing debt into new loans. New loans do not include borrowers topping up an existing loan.

New Zealand Banking Association chief executive Roger Beaumont says: “The increase in new home loans is quite surprising in the current economy where interest rates have risen significantly off historically low rates. It shows activity in the market is holding up despite the cost of borrowing rising to help combat inflation, and many New Zealanders experiencing financial challenges. It also bucks the downward trend in the previous six months, when new home loans were down around 11%.”

The average home loan value for first home buyers was $476,919, a decrease of 12.7% compared to the previous six months. “This shows that first home buyers make up a good proportion of new home loans and, due to housing market conditions, they don’t need to borrow as much as previously, which is good news for people getting into their first home.”

In December 2023 there were 1.31 million home loans across 1.1 million customers. The average value of all home loans was $322,614. In that period 16,167 home loans switched from principal and interest repayments to interest-only, up from 11,090 in the previous six months.

“Savers are making the most of raised interest rates, which is not surprising, with the average interest rate on term deposits sitting at 5.8%” says Beaumont. The average interest rate on savings accounts in the period was 3.6%.

The value of term deposits increased by 11.1% to $171 billion, with an average balance $105,904.

The full set of retail banking insights for July to December 2023 is available here: https://www.nzba.org.nz/wp-content/uploads/2024/04/Retail-banking-insights-July-to-December-2023.pdf

ENDS

“We welcome the removal of overly prescriptive affordability assessment requirements because it should help fix the one-size-fits-all approach that treated all types of lending and borrowers the same. The change still means that consumers are protected, and lenders need to be responsible,” NZBA Chief Executive Roger Beaumont says.

“What it means is it’ll go back to the way it was prior to these regulations, when banks could exercise discretion in determining whether a customer was suitable for a loan or not,” said chief executive Roger Beaumont.

Beaumont is pleased to see moves to simplify other matters in the CCCFA, especially personal liability for directors and senior managers, the requirements for disclosure of information to borrowers and the updating of the Responsible Lending Code guidance, to get the balance right and help ensure consumers don’t see a prescriptive approach reintroduced.

NZ Banking Association chief executive Roger Beaumont joined Mike Hosking.

The banking industry welcomes changes to consumer lending law announced by the government today.

New Zealand Banking Association chief executive Roger Beaumont says: “We welcome the removal of overly prescriptive affordability assessment requirements because it should help fix the one-size-fits-all approach that treated all types of lending and borrowers the same.

“The change still means that consumers are protected, and lenders need to be responsible.

“This will help bring back flexibility and discretion for banks to help customers in need, for example in emergency situations, and better recognises that banks already have their own prudent lending policies, which help ensure borrowers can afford to repay any debt.

“We look forward to working with officials on Responsible Lending Code guidance, to get the balance right and help ensure we don’t see a prescriptive approach reintroduced.

“We are also pleased to see moves to simplify other matters in the CCCFA, especially personal liability for directors and senior managers, and the requirements for disclosure of information to borrowers. We will work constructively with the government on these changes.”

ENDS

“This will help bring back flexibility and discretion for banks to help customers in need, for example in emergency situations, and better recognises that banks already have their own prudent lending policies, which help ensure borrowers can afford to repay any debt.”

“This will help bring back flexibility and discretion for banks to help customers in need,” said Banking Association chief executive Roger Beaumont.

“We’re also asking the government to help remove any regulatory barriers to the Anti-Scam Centre working effectively, and to set scam prevention expectations for other industries,” Beaumont said.