Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


BNZ’s Thorburn comfortable with level of low equity loans

BNZ’s Thorburn comfortable with level of low equity home loans, wary of property developers

By Paul McBeth

May 9 (BusinessDesk) - Bank of New Zealand chief executive Andrew Thorburn says he’s comfortable with the level of low equity home loans the lender is writing, though he is still wary of funding new property developments.

About 15 percent of the Auckland-based lender’s mortgage book is at a high loan-to-value ratio of 80 percent or above, the lowest among all of the major banks which are about 20 percent, Thorburn told BusinessDesk. BNZ charges a low equity premium of 0.4 to 0.5 percentage point premium on loans with an LVR above 85 percent as a means to mitigate its risk.

“We’re doing things sensibly,” Thorburn said. “When you look at the quality of our housing book, it’s a high asset quality, it’s very strong.”

The Reserve Bank yesterday raised concerns about New Zealand’s bubbling property market and the risk it poses to the financial system if it gets too far out of check.

Chief among those concerns was the increase in low equity lending by the banks, which accounted for almost a third of new mortgages, and it announced plans to increase the amount of capital local banks will have to hold to back mortgage lending. It’s also preparing to introduce macro-prudential tools, which include potential restrictions on high LVR lending.

Auckland property values have climbed 12 percent to $628,205 in the latest 12 months, according to state valuer Quotable Value figures today. Kerry Stewart, QV operations manager said demand in parts of Auckland was “so high that there is little opportunity to delay making offers.”

BNZ’s Thorburn said the main issue driving Auckland’s rising house prices was the lack of supply to meet the demands of a growing population, which is a long-term issue.

While he is still wary of lending to property developers after the sector become a source of overleverage, he would be “a little more open to residential development” provided it addressed long term infrastructure issues including transport.

BNZ lifted gross loans 3.3 percent to $59.4 billion as at March 31 from a year earlier, and customer deposits climbed almost 11 percent to $37.1 billion.

Cash earnings from the New Zealand banking operations, which strip out wholesale operations, rose to $387 million in the six months ended March 31 from $385 million in the same period a year earlier.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Cosmetics & Pollution: Proposal To Ban Microbeads

Cosmetic products containing microbeads will be banned under a proposal announced by the Minister for the Environment today. Marine scientists have been advocating for a ban on the microplastics, which have been found to quickly enter waterways and harm marine life. More>>

ALSO:

NIWA: 2016 New Zealand’s Warmest Year On Record

Annual temperatures were above average (0.51°C to 1.20°C above the annual average) throughout the country, with very few locations observing near average temperatures (within 0.5°C of the annual average) or lower. The year 2016 was the warmest on record for New Zealand, based on NIWA’s seven-station series which begins in 1909. More>>

ALSO:

Farewell 2016: NZ Economy Flies Through 2016's Political Curveballs

Dec. 23 (BusinessDesk) - New Zealand's economy batted away some curly political curveballs of 2016 to end the year on a high note, with its twin planks of a booming construction sector and rampant tourism soon to be joined by a resurgent dairy industry. More>>

ALSO:


NZ Economy: More Growth Than Expected In 3rd Qtr

Dec. 22 (BusinessDesk) - New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services, and was bolstered by tourism and transport ... More>>

  • NZ Govt - Solid growth for NZ despite fragile world economy
  • NZ Council of Trade Unions - Government needs to ensure economy raises living standards
  • KiwiRail Goes Deisel: Cans electric trains on partially electrified North Island trunkline

    Dec. 21 (BusinessDesk) – KiwiRail, the state-owned rail and freight operator, said a small fleet of electric trains on New Zealand’s North Island would be phased out over the next two years and replaced with diesel locomotives. More>>

  • KiwiRail - KiwiRail announces fleet decision on North Island line
  • Greens - Ditching electric trains massive step backwards
  • Labour - Bill English turns ‘Think Big’ into ‘Think Backwards’
  • First Union - Train drivers condemn KiwiRail’s return to “dirty diesel”
  • NZ First - KiwiRail Going Backwards for Xmas
  • NIWA: The Year's Top Science Findings

    Since 1972 NIWA has operated a Clean Air Monitoring Station at Baring Head, near Wellington... In June, Baring Head’s carbon dioxide readings officially passed 400 parts per million (ppm), a level last reached more than three million years ago. More>>

    ALSO:

    Get More From Scoop

     
     
     
     
     
     
     
     
    Business
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news