Lending update

[donna]

A good update on housing and loans

The country's bank mortgage pile grew by the biggest monthly amount in October in nearly three years, according to the latest Reserve Bank (RBNZ) figures.

The RBNZ said the banks' total housing lending stock increased by $1.58 billion in October 2024 to a grand total of $360.58 billion. The housing lending annual growth rate rose from 3.7% to 3.8%

This was the biggest monthly increase since a $2.049 billion rise in December 2021.

[brokerman]

We have seen the biggest jump in applications and approvals for months during November. Investors back in the market, first home buyers active too. RBNZ signaling further cuts to the OCR in February 2025 definitely a factor. Not so cool is the turnaround times with most banks, nearly 3 weeks is not uncommon, they need to improve.

[Jeffa]

. Not so cool is the turnaround times with most banks, nearly 3 weeks is not uncommon, they need to improve.

So no lessons were learnt from banks or brokers from wait times during Covid?

I understand this is your livelihood, but banks need to start investing millions into Artificial Intelligence in automated systems cutting bank advisors and brokers out of the equation, with profits split between bank’s shareholders and its customers.

[brokerman]

So no lessons were learnt from banks or brokers from wait times during Covid?

I understand this is your livelihood, but banks need to start investing millions into Artificial Intelligence in automated systems cutting bank advisors and brokers out of the equation, with profits split between bank’s shareholders and its customers.

I tend to agree in regards to AI. Fortunately my business is only about 15% reliant on banks (mainstream Mum and Dad type lending) and so AI will have a limited impact. For many though the change will be profound and fast. Banks here in New Zealand are still in the steam age when it comes to IT.

[Engineer]

On Monday this week,
ASB test rates dropped from 8.1% to 7.6%
Kiwibank from 8.0 to 7.5%

Roughly means that buyers can now borrow 6.5 % more for a house ?
Can't be bad.

[brokerman]

On Monday this week,
ASB test rates dropped from 8.1% to 7.6%
Kiwibank from 8.0 to 7.5%

Roughly means that buyers can now borrow 6.5 % more for a house ?
Can't be bad.

I did a quick comparison for a first home buyer on $100k no debts. At the peak test rate of 9.15% borrowing was around $500k, now it's closer to $600k, quite a jump!

[Engineer]

Thanks Brokerman.
Can you run the numbers on a Feb OCR of 3.75 ?

In other words, drop the test rate by a further 0.5%. All theoretical.

Whats the uplift

[brokerman]

Thanks Brokerman.
Can you run the numbers on a Feb OCR of 3.75 ?

In other words, drop the test rate by a further 0.5%. All theoretical.

Whats the uplift

Probably add another $30k to borrowing

[Engineer]

Cheers,

If you have time, how about Mr and Mrs Joe Average with a medium priced property of 1000,500 in Auckland ?

Keep their total mortgage payments the same, but increase their borrowing capacity based on Bank test rates of

1. 9.15%
2. 7.5%
3. 7.0 percent.

Thanks in Advance.

[brokerman]

Cheers,

If you have time, how about Mr and Mrs Joe Average with a medium priced property of 1000,500 in Auckland ?

Keep their total mortgage payments the same, but increase their borrowing capacity based on Bank test rates of

1. 9.15%
2. 7.5%
3. 7.0 percent.

Thanks in Advance.

Perfect couple, no kids or debts on $75k pa each. 9.15% gives around $800k 7.5% gives around $925k and 7.0% gives around $980k

Then you just have to pay it all back!