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

 

Keep Digging: Seabed Ironsands Miner TransTasman Tries Again

The first company to attempt to gain a resource consent to mine ironsands from the ocean floor in New Zealand's Exclusive Economic Zone has lodged a new application containing fresh scientific and other evidence it hopes will persuade regulators after their initial application was turned down in 2014. More>>

Wool Pulled: Duvets Sold As ‘Premium Alpaca’ Mostly Sheep’s Wool

Rotorua business Budge Collection Limited (Budge) and sole director, Sun Dong Kim, were convicted and fined a total of $71,250 in Auckland District Court after each pleading guilty to four charges of misrepresenting how much alpaca fibre was in their duvets. More>>

Reserve Bank: Labour Calls For Monetary Policy To Expand Goals

Labour's comments follow a speech today by RBNZ governor Graeme Wheeler in which Wheeler sought to answer critics who variously say he should stop lowering interest rates, lower them faster, or that inflation-targeting should no longer be the primary goal of the central bank's activities. More>>

ALSO:

BSA Extension And Sunday Morning Ads: Digital Convergence Bill Captures Online Content

Broadcasting Minister Amy Adams has today announced the Government’s plans to update the Broadcasting Act to better reflect today’s converged market... The Government considered four areas as part of its review into content regulation: classification requirements, advertising restrictions, election programming and contestable funding. More>>

ALSO:

March 2017: Commerce Commission Delays Decision On Fairfax-NZME

The Commerce Commission has delayed its decision on the proposed merger between NZME and Fairfax Media's New Zealand assets, saying the deal is complex and it needs more time to assess the impact on both news content and the advertising market. More>>

ALSO:

Plan Plan: Permanent Independent Hearings Panel Proposed For Planning

The Productivity Commission recommends creating a permanent independent hearings panel like the one that cut through local politics to settle Auckland’s Unitary Plan, for the whole country. More>>

ALSO:

Statistics: NZ Jobless Rate Falls To 5.1% Under New Methodology

New Zealand's unemployment rate fell more than expected in the second quarter as Statistics New Zealand adopted a new way of measuring the labour market to bring the country in line with international practices, and while a growing economy continued to support jobs growth. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news