By Gareth Vaughan
ASB has again recorded the lion's share of its quarterly residential mortgage lending growth from loans where the borrower has a deposit equivalent to less than 20% of the property purchase price.
And Westpac has again posted the vast bulk of its growth from lending where the borrower has a deposit of at least 20%.
ASB's latest General Disclosure Statement (GDS) shows it grew home loans by $852 million, or 2.2%, to $40.284 billion in the three months to June 30. Of the growth $625 million, or 73%, came from loans where the loan-to-value ratio (LVR) was above 80%. The Reserve Bank has recently finalised its so-called macro-prudential tool that could be used, on a temporary basis, to restrict banks' high LVR residential mortgage lending.
The 73% figure is slightly higher than the 71% of home loan growth from high LVR loans ASB recorded in the March quarter, but well below 95% in the December quarter. As of June 30 ASB had 23.23% of its total home loans by value at LVRs above 80%, up from 22% at March 31.
ASB CEO Barbara Chapman told interest.co.nz last week just over 20% of the bank's new residential mortgage lending came from high LVR lending in the June quarter. Chapman said ASB was writing more loans at a lower LVR than at an over 80% LVR. But she said the lower LVR book runs off faster, because it's much bigger, meaning on a net position a lot of growth is seen in the high LVR lending.
Chapman also said she expects the Reserve Bank will use its new tool to restrict banks' high LVR lending.
The GDS shows $455 million worth of the June quarter growth came from loans with LVRs between 80.1% and 90%, $170 million came from loans with an LVR between 90.1% and 100%, and $227 million came from loans with LVRs between zero and 80%.
Meanwhile, the GDS shows ASB paid parent Commonwealth Bank of Australia dividends of $90 million in the year to June 30, well down from $500 million the previous year. ASB will also pay a $20 million dividend on September 25.
Westpac's lower LVR lending
In contrast to ASB, Westpac's GDS shows the vast bulk of its June quarter home loan growth again came through loans with LVRs below 80%.
Westpac grew residential mortgages by $518 million, (or 1.4% to $36.980 billion), with $515 million, or 99%, from non-high LVR lending. The 99% is up from 92% in the March quarter.
The percentage of Westpac's overall book at high LVRs, by value, dropped slightly to 23.24% from 23.56% at March 31.
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4 Comments
It has. At the moment changes in mortgage rates are the best predictor for changes in house prices, having narrowly taken over from the Balance of Payments Debit Capital Transfers (which is still a better long term predictor). If you take five year blocks looking back, and say how good a predictor of house prices is this you get a graph like"
https://www.dropbox.com/s/y20mpkj27q3ek2l/CreditVsMortgageRates.png
Where dark blue is how good Balance of Payments Debit Capital Transfers is as an explanation of house prices, green is how good mortgage rates is. (In reality they are both very good, mortgage has the short term advantage, Capital Transfers has the long term one).
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