NZ mortgage war heats up

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By Leith van Onselen

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).

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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).

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The RBNZ needs to expedite the implementation of macroprudential controls on mortgage lending before the situation gets out of hand.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.