With weekly new mortgage approval figures mired below 5,000 and little sign of a spring housing market bounce, some banks are going the extra mile to try and entice home buyers into the market and incentivising mortgage brokers to bring them business.
ASB, ANZ, National Bank and Westpac have offered, or are offering, spring specials.
They come as Reserve Bank data shows mortgage approvals for each of the last three weeks below 5,000 at 4,958, 4,890 (for the week to October 8 revised up from an initial figure of 4,621) and 4,894 respectively. Those are near the non-public holiday week low of 4,686 recorded in the week to September 10, the low since the Reserve Bank series launched in 2003.
On a 13 week basis the figures for the past three weeks are down 25% year-on-year. At NZ$626.3 million, NZ$614.7 million and NZ$646.1 million, value wise mortgage approvals for all three weeks are all down 27% year-on-year.
The big four banks - ASB, ANZ (including National Bank), BNZ and Westpac - plus Kiwibank are all prepared to lend more than 80% of a house purchase price to certain customers’. And the spring push comes at a time when most economists don't expect the Reserve Bank to hike the Official Cash Rate, currently at 3%, until next March.
Westpac launched a campaign for mortgage brokers on Monday offering an additional 0.20% commission, over and above the current commission they receive, for new residential lending approved and advanced before the end of the year.
The Westpac offer is available for all new residential lending of NZ$250,000 or more and to both new and existing Westpac customers. It applies to mortgages with loan to valuation ratios (LVRs) of 80% or less, and to receive the offer, all new lending must be approved and advanced during the term of the campaign.
Meanwhile ASB recently ran a one week special offering a six month new lending rate of 5.95% per annum and a 12 month new lending rate of 6.3%. Those rates are below the bank’s advertised rates over six and 12 months of 6.35% and 6.45%, respectively. See all bank mortgage rates here.
However, the catch was that the mortgage must be worth more than NZ$300,000 and half the money lent needed to be borrowed on ASB’s floating rate, currently 6.25%. There were no restrictions placed on LVRs.
Sister banks ANZ and National are also offering specials. For new residential loans, they are offering to pay up to NZ$1,000 towards customers’ legal costs and waive the application fee for mortgage applications received and approved between October 3 and November 30 and settled by December 31.
ANZ and National are offering mortgage brokers an extra 0.10% bonus commission for applications received and approved between October 3 and November 30 and settled by year’s end. They say new residential lending must top NZ$50,000 in value for borrowers to be eligible.
Separately, in a recent interview with interest.co.nz Kiwibank CEO Paul Brock urged potential first home buyers to take the plunge.
“I think at the end of the day there’s no right or wrong time to get into the (housing) market,” Brock said.
“The key is actually whether customers themselves can actually afford it, afford the loan. And that should be the primary driver.”
31 Comments
Did I not say we could expect the banks to have a spring burst of BS in an effort to save their property ponzi scheme....punters need to use the fat between their ears on this one....they are being invited to take a punt that rates will not go up...that the economy will flick back to the bonanza splurging days of bubble activity...that their employment position is 100% secure...that the second crash of world markets cannot possibly happen...etc etc. All they need do is ask the bank to make the mortgage for thirty years.....doh!
And the peasants need to do some basic math...the Kiwi$ is being destroyed at the rate of 30%plus every ten years..that is govt and RBNZ policy....so if property were to remain flat....the longer you wait to buy the lower the real price will be....now that may not be the case for some suburbs in Auckland or the better parts of Queenstown, but it is a fact for dam near the whole of the rest of the country.....but if you want to be an idiot and help the banks by becoming one of their tenants...off you go sucker.
Oh yes Neville Mr Market is indeed here, but the RBNZ is too...the cheaper for longer policy is ensuring a market in which the banks have the advantage of flogging their credit at low prices to mugs who fail to understand the prices have no ceiling when the term of the mortgage runs out......that is the fish hook in the guts for the fools.
If those buying the mortgage were asked:.."you do realise that when the two year term ends, the interest rate can be raised as high as the market wants to go?"....."the 7% for 2 years could become 17% ...as it has been in the past in NZ?"
Yes Cam but we have us a whole generation of idiots who have never experienced rates near 20%...and the bullshit being produced by the Fed and others cannot last...that's when the stuff hits the wall..or to be accurate hits the fools who borrowed heaps...what they ought to do to discover the potential risks is to ask the bank for insurance cover against rising rates......my bet is no insurance company would accept the risk....I am dam sure the banks wouldn't...nor will the govt.
But we live in a country of bumpkins who need to lose their equity before they will learn it is possible to lose their equity! The govt and the banks know this is true and so they carry on as before pumping the ponzi scheme with cheap credit soon to be supported by the mortgage debts sold to earlier idiots....Alice in Wonderland stuff for sure.
Here are some telling comments from Bollard:
"I'm not feeling in an uncomfortable position at all - we do have the tools and powers to move against asset bubbles should they arise," .......errr what about the property bubble in the here and now?...oh that one doesn't count!
and now for a bloody good laugh...you want a good laugh don't you...it's almost free!
Bollard said he expects consumer spending to pick-up, and help underpin the recovery, when confidence returns, the labour market improves, and producers finish deleveraging and resume spending to take advantage of strong commodity prices! tvnz
Ahhh he's been right all along. There's an army of mortgage brokers out there (including bank staff) that don't make money out of the mortgage itself, merely from selling them. Selling less, the price goes down, it's inevitable, if the market doesn't pick up they shut up shop.
Interest rates around 20%? That depends on defaults. It won't take many $500,000 + mortgages to default before the rates go up to compensate. Mortgages the perfect product. The gift that keeps on giving. It will have nothing to do with inflation, or what Bolly does.
Wolly. To get rates as high as you suggest, and yes I have seen them higher in my lifetime, you will be within an environment of very serious inflation. Rates only get that high with a huge demand for funds because the prices of everything (including houses) are rising so rapidly.
Go back a bit further and look at the Great Depression....ie its essential we look at the right bit of history to see if [hyper-]infation is a possibility... As we exited the GD, yes inflation so its is quite probable, but that was after 8 odd years....and it took a war and govn stimulus though massive war spending to do it...Now that Govn stimulus actually got out into real economy as tanks etc were being bought but not in this one where it seems most of the money stays on the spreadsheet......we also had cheap energy and lots of workers with $ in their pockets....this time we dont have cheap energy, we have a high un-employment plus the highest debt ever, oh and the baby boomer retiring issue....all these are drags on any recovery.
Hyper-inflation.....maybe one day but Im not convinced its soon...As a point the real economy is 50% supposedly of GDP so half the $9Trillion and the USA need to get back to that 'real GDP....so thats huge contractiona and deflation, into that huge hole the Govn wants to throw 1 or 2 trillion....it just looks way too small.
regards
In the 80's in Sydney, Gavin, I had a friend whose variable rate went to 22% from 8% within a year. Sure, their flat value eventually went up. Trouble is, they had to sell it first, because they couldn't afford the cashflow of the monthly mortgage payments. Rates that high tend to put off purchasers ( and hence price rises) before property prices rise. It's only when rates subsequently fall, that prices catch-up.
Rates are definitely going higher. For the past 10 years coucils have been charging developers "contribution fees" on each section subdivided instead of increasing rates. Now that the development is over where do you think the money for basic council provided services is going to come from? Rates increase anyone?
From memory Wally, they talked it down about 35K from the valuation to around 400K. Out Westish.
They're happy I think. Needed a house to themselves as baby on the way. Weren't keen on renting.
So not just jumping into it for no reason.
Met a girl once who bought an 'investment' property in Ohakune a few years ago. I asked why and did she perhaps ski alot, and her answer was "Well I just did it because everyone else was (buying houses)"
Only got sporadic rental demand for it in winter (and then there has to be some good snow) But gotta pay the mortgage all year round.
Different strokes for different folks eh
Wolly ,you wrote
Yes Cam but we have us a whole generation of idiots who have never experienced rates near 20%.
It seems you have a license to insult all and anyone you like, so somehow the generation that did not experience 20 % rates deserves to be called, Idiots! You sound like a self centered opinionated idiot to me. Most of your posts indicate that you consider yourself to be the only rational being left in NZ. Go consult a shrink, however I am sure like most narcissistic people you wont consider this advice.
Toughen up , Wolly is right, there is a generation of idiots, and self absorbed morons walking around like zombies making poor decisions which impact those who take the time to evaluate such serious decisions, and potential risk around them.
These same idiots are the ones who swap party votes each 3 years believing the electoral campaign lies, and wonder why the situation never gets any better. If they even think that much. Back to the tele.. there you go, nice and easy, no need to over extend ones brain!
Off piste. ..The last thing the UK needs is inflation. We ought to have at least one Central Bank trying to avoid the inflation madness...
" While tax revenues grew in September, the data also showed the extra income was countered by a sharp rise in interest payments to £2.3bn ... This was due to higher inflation pushing up the interest payable on index-linked gilts ..."
Wolly is right again and again in what he is saying.
Great first comment. If things really ARE so good:
".......All they need do is ask the bank to make the mortgage for thirty years.....doh!...."
To that I would add, make the mortgage a non-recourse one, and we'll talk, eh?
Re Bollard's comments, Wolly, even the OECD's recent Housing Markets analysis pointed out that monetary policy makers face an impossible situation if they are trying to restrain a property bubble that inflates regardless through ups AND downs in the business cycle, AND not kill off the "jobs and production" sector. Does Bollard not understand this? The Aussies Glenn Stevens seems to, not that the politicians take any notice of him. Our own Don Brash said something right on, in the mid 1990's.
Yes Bolly understands...his problem is the economy has dropped to a new lower level and no amount of grandstanding will change that...so he goes with cheaper for longer and at the behest of the bank bosses, he is giving English the 'nudge nudge wink wink' about govt backing for the banks to flog the covered bond poo so they can inject heroin into the market and save their balance sheets.
Hence the Kiwibank CEO blather and now this Westpac BS about 4+% growth....it's all pure fluff aimed at sucking fools into borrowing. All part of the spring offensive on the market.
They are having trouble because the peasants, farmers and all, can see through their spin to an even bigger hole for the fools who do the borrowing. The so called commodity boom is nout but an adjustment for the Fed destruction of the US toilet paper. All it will take is for Beijing to stop for a cuppa and kabooom.
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