“Every time there’s a change, banks need to adjust their lending policies and processes and re-train staff. Part of developing quality regulation is making sure it’s fit for purpose the first time around.”

New Zealand Banking Association chief executive Roger Beaumont told NZ Adviser that the drop in the number of new home loans was a likely reflection of the state of the housing market and wider economic conditions during the first half of 2023.

“For a long time, when interest rates were at an historic low, people who relied on income from bank deposits got relatively low returns. Now that interest rates are up, people are investing more in term deposits.”

“Over 43% of home loan customers were ahead on their loan repayments, compared to 1.4% of home loan customers behind on their repayments. That shows that many people with home loans are managing relatively well. It means that those paying more than their minimum repayments likely built in a cushion in case their circumstances change.”

Savers are making the most of higher interest rates and borrowers are managing through the current economic challenges, according to retail banking data insights for the six months to June released by the New Zealand Banking Association today.

New Zealand Banking Association chief executive Roger Beaumont says that while the rise in the cost of living is hitting many households hard, borrowers are also affected by the sharp rise in the cost of borrowing from historic lows, driven by global conditions and the Reserve Bank’s efforts to reduce inflation by raising the official cash rate. In the last two years, the OCR has risen from its all-time low of 0.25% to the current 5.5%.

“Over 43 per cent of home loan customers were ahead on their loan repayments, compared to 1.4 per cent of home loan customers behind on their repayments. That shows that many people with home loans are managing relatively well. It means that those paying more than their minimum repayments likely built in a cushion in case their circumstances change. It also means they’re paying off their debt faster.”

In June there were nearly 1.25 million home loans across 1.08 million customers. The average value of all home loans was $323,463. Of the 40,438 new home loans opened, 26% were issued to first home buyers.

11,090 home loans switched from principal and interest to interest-only repayments. This is slightly down from the previous six months when 12,120 home loans made that switch.

“Over 65 per cent of people with a credit card are paying off what they owe without incurring any interest cost. That shows a high level of financial capability among credit card holders.

“Savers are responding to rising interest rates. For a long time, when interest rates were at an historic low, people who relied on income from bank deposits got relatively low returns. Now that interest rates are up, people are investing more in term deposits. The value of term deposits increased by 8.1 per cent to $154 billion, with an average balance of $107,900.”

Average interest rates on term deposits increased from 3.19% to 4.9% over the period, while average interest rates on savings accounts increased from 2.42% to 3.59%.

Of all bank customers, and there’s over 9.5 million unique customer accounts, 5,655 were granted hardship assistance by their bank. That’s up 1,369 customers from the previous six months.

“Banks are here to help, and anyone experiencing financial difficulty should contact their bank as soon as possible. The sooner you talk to your bank, the more likely they’ll be able to help,” says Beaumont.

The full set of retail banking insights for January to June 2023 is available here: https://www.nzba.org.nz/wp-content/uploads/2023/10/Retail-banking-insights-January-to-June-2023.pdf

ENDS

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The NZ Banking Association said last week that the industry was focusing on a number of initiatives to fight fraud and scams, including real-time information sharing between organisations affected by scams, and a confirmation of payee account name checking service.

According to the New Zealand Banking Association, banks have made significant investments when it comes to fraud analytics and prevention. These investments aim to help identify unusual spending on credit cards and check with customers before processing those payments, as well as warn of potential scams when customers make payments in suspicious circumstances.

As part of the banking industry’s Friday announcement, the NZBA said the industry supported a national anti-scam centre, would remove hyperlinks from text messages and would work together to freeze mule accounts, used to siphon stolen money from victims.