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

 

Finance: Major Campaign To End "Gross Overtaxation Of Savings"

The campaign – which includes a special web site through which New Zealanders can e-mail their own and other MPs and party leaders – is backed by Age Concern, Consumer NZ, the Financial Services Council and the Taxpayers’ Union. More>>

ALSO:

Scoop Business: Leighton-Led WGP To Build, Manage Transmission Gully

The Wellington Gateway Partnership, led by a unit of ASX-listed Leighton Holdings, has won the $1 billion contract to build the Transmission Gully road north of Wellington. More>>

ALSO:

Gareth Morgan: The Government’s Fresh Water Policy – Revisited

Fresh water quality is the latest area to be in the sights of Gareth Morgan and his research organisation The Morgan Foundation... They found that the fresh water policy was a bit murkier than the Environment Minister let on. More>>

ALSO:

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news