Bigger deposits needed for new mortgages
(2 March, 2012 – New Zealand) First home buyers with low deposits may not be eligible to get a mortgage, with New Zealand’s biggest bank; ANZ National Bank, ruling out financing almost an entire value of a property.
ANZ reported a NZ$415 million (A$322 million) profit for the three months to December, up 60 percent on the same time a year earlier.
Net interest income grew by NZ$30 million to NZ$678 million, while other revenue gained NZ$139 million to NZ$219 million.
The massive increase was mainly due to a net NZ$97 million fair-value gain on the revaluation of the bank's financial assets and liabilities.
ANZ National Bank chief executive David Hisco said the bank had all but stopped any lending at 95 percent or more of a property's value since the global financial crisis.
He said that since the crisis banks had been considering their responsibilities.
'And you have to ask whether it is really the right thing to do to give somebody a loan at 95 percent these days.'
A NZ$25,000 deposit on a NZ$500,000 home left a big loan to pay off, he said.
With the current historically low interest rates, borrowers would be at significant risk if rates increased just 2 or 3 percent at any stage over the next 10 or 20 year, Hisco said.
Homeowners with big mortgages relative to the value of their house made up the biggest group of borrowers asking for help.
In an uncertain world it was better for first-home buyers to save for a 10 percent deposit, he said.
Hisco said the tighter lending strategy had contributed to the total housing mortgage book slipping slightly over the last year to $53.4 billion.
Underlying profit for the period of $351 million was up 17 percent on the corresponding period last year.
Provisioning for bad and doubtful debt was up NZ$12 million to NZ$46 million on a year earlier, but down from NZ$190 million at the June full year.
Credit quality continued to improve, with fewer individually impaired and past-due-date loans.
Net interest income grew by NZ$30 million to NZ$678 million, while other revenue gained NZ$139 million to NZ$219 million.
The massive increase was mainly due to a net NZ$97 million fair-value gain on the revaluation of the bank's financial assets and liabilities.
ANZ National Bank chief executive David Hisco said the bank had all but stopped any lending at 95 percent or more of a property's value since the global financial crisis.
He said that since the crisis banks had been considering their responsibilities.
'And you have to ask whether it is really the right thing to do to give somebody a loan at 95 percent these days.'
A NZ$25,000 deposit on a NZ$500,000 home left a big loan to pay off, he said.
With the current historically low interest rates, borrowers would be at significant risk if rates increased just 2 or 3 percent at any stage over the next 10 or 20 year, Hisco said.
Homeowners with big mortgages relative to the value of their house made up the biggest group of borrowers asking for help.
In an uncertain world it was better for first-home buyers to save for a 10 percent deposit, he said.
Hisco said the tighter lending strategy had contributed to the total housing mortgage book slipping slightly over the last year to $53.4 billion.
Underlying profit for the period of $351 million was up 17 percent on the corresponding period last year.
Provisioning for bad and doubtful debt was up NZ$12 million to NZ$46 million on a year earlier, but down from NZ$190 million at the June full year.
Credit quality continued to improve, with fewer individually impaired and past-due-date loans.
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