The latest Reserve Bank of New Zealand (RBNZ) data shows that New Zealand mortgage commitments collapsed by 27% in the year to March 2022, driven by a 46% decline in investor mortgages:

New Zealand mortgage demand has collapsed.
This collapse in demand follows the sharp lift in interest rates across both fixed and floating mortgages alongside the RBNZ’s monetary tightening:

New Zealand mortgage rates have lifted.
Another factor that has driven mortgage demand lower is the Ardern Government’s introduction of tighter mortgage lending rules in December under the Credit Contracts and Consumer Finance Act (CCCFA).
Under these changes, lenders are required to apply stricter guidelines when assessing a borrower’s ability to repay their mortgage. Mortgage brokers have complained that these rules have contributed to a “credit crunch”, with 7% of mortgages that would previously have been approved are now being turned away.
Last month, the Ministry of Business, Innovation and Employment proposed changes to ease the burden under the CCCFA, which are now out for consultation with industry. The consultation paper notes that some banks were applying the rules in a way that was “more onerous and restrictive” than had been intended.
While the New Zealand Bankers’ Association welcomes the government’s review of the CCFA, it still complains that the proposed “tweaks” are “just a band aid” and won’t “make a big difference for most borrowers”, since “customers will still have to provide detailed information about their spending, resulting in a more painstaking process and more loan applications being declined than before the December rule change”.
The Bankers’ Association is, therefore, calling for a more fulsome review of the CCFA.
With New Zealand house prices falling more than 4% since November, and the RBNZ still considering prices to be “unsustainably high”, the Ardern Government will need to tread very carefully to ensure a soft landing.
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NZ has as much chance of a soft landing as Australia does. Buckleys
How’s the debt growth? Doesn’t look good.
No debt growth means no debt spending, means no demand, means no jobs and no wages.
What else do they have except debt spending to maintain these levels of false demand that have led to “full employment”? What else does anyone have?
Big government deficits and QE can replace credit growth as a substitute for expanding the money supply. It is the only option for economies with super high private debt. Technically this could be used to reduce the private debt burden if the money expansion is used to pay down debt. The current problem is when rates are so low at the same time that QE is being used is that it becomes an opportunity for people to go further into debt.
There’s a good argument that higher rates and QE could work to deleverage the private debt pile.
Correct, QE and other shenanigans like a UBI for example are equivalent to rate cuts that would allow more debt expansion, but they come at the cost of taking on more government debt
And i hadn’t considered high interest rates plus QE or a UBI which would work to pay down or replace debt. Thats an interesting thought
Westpac’s economists now expecting house prices to fall by 15% … Greg Ninness … Interest Co NZ
https://www.interest.co.nz/property/115684/westpac-increases-house-price-decline-forecast-15-10-says-drop-could-be-greater
Westpac increases house price fall forecast to 15% over two years … Susan Edmunds … Stuff NZ
https://www.stuff.co.nz/life-style/homed/real-estate/300581854/westpac-increases-house-price-fall-forecast-to-15-over-two-years
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Note too New Zealand’s new dwelling consents / approvals for March were a whopping 78% higher than Australias when adjusted appropriately for the respective populations.
The standard industry measure is the approvals / consent rate per 1000 population per annum’. For the month of March Australia was 7.04 … New Zealand a staggering 12.52 … read more via …
https://www.macrobusiness.com.au/2022/05/aussie-dwelling-approvals-tanked-in-march/#comment-4270395
With an official cash rate of 1.5% how come OTC mortgage loans are 5%? Seems like a lot of bank margin when it normally runs at OCR +2-3%, thus 3.5 -4.5%.
https://www.rbnz.govt.nz/monetary-policy/official-cash-rate-decisions
There in lies the rub right.. what else influences the prime rate for a bank? BBSW? Libor? Not just want the reserve bank of a country does, What are these doing?
Like everything else in NZ, banks charge more because they can. Where else are we going to go?
https://www.stuff.co.nz/business/103907588/banks-make-more-money-out-of-kiwis-than-australia
We need a 50% drawdown in both Aus and NZ! 4% isn’t enough.
It will be interesting to see how the NZ construction and property development sector fairs in the next 2 years with this financial hanglider (without safety straps).
Ergo, it will be interesting to see how the NZ banks property loan books and bottom lines perform…
Ergo, it will be interesting to see how the political system feeding the financial and planning regulatory systems immolates…
X 10 for Straya
#systemicfailureTM