The competition for mortgage lending is heating up in New Zealand. Last month, government-owned KiwiBank announced that it would drop its six month fixed mortgage rate to just 4.79%, which is reportedly the lowest mortgage rate offered by a New Zealand bank for “many decades”. And today, ASB (owned by the CBA) announced that it would give borrowers a free 42-inch Sony Bravia LED TV as well as up to $NZ1,000 cash-back for anyone that takes out a mortgage in excess of $NZ100,000 (including refinancings from another lender).
New Zealand mortgage rates have been near record lows since early-2011 (see next chart).
And the growth of mortgage debt has picked-up pace over the past year, which is helping to fuel house prices, especially in Auckland (see below charts).
The RBNZ needs to expedite the implementation of macroprudential controls on mortgage lending before the situation gets out of hand.
