No change on interest-only loans from BNZ, ANZ, ASB
Westpac Banking Corp's New Zealand unit yesterday announced plans to cut its interest-only terms to five years from 15 years.
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None of the other major Australian-owned banks dominating New Zealand's residential mortgage market have immediate plans to follow Westpac's lead in scaling back the length of their interest-only loans, which are typically geared for investors chasing capital gains.
Westpac Banking Corp's New Zealand unit yesterday announced plans to cut its interest-only terms to five years from 15 years, citing the build-up in investor activity which is now accounting for 40 percent of turnover and has attracted the ire of policy makers. The bank's rivals don't plan to follow suit, though Bank of New Zealand and ASB Bank say their existing terms are already five years.
"As highlighted in recently published RBNZ data, we note the overall market proportion of new interest-only lending is at 41 percent - BNZ's proportion of interest-only lending is significantly lower than this," a spokeswoman said in an emailed statement. "Our current policy is to allow interest-only lending to a maximum term of five years. However, under special circumstances by exception we may allow up to a term of 10 years."
ASB said its maximum period for interest-only loans is "generally five years, which has been unchanged for some time", while ANZ Bank New Zealand, the country's biggest lender, said it regularly reviews its credit policy to make sure it suits the market.
Last week, the Reserve Bank said it could roll out its existing restriction on highly-leveraged lending to Auckland residential property investors across the country by the end of the year, something the Bankers' Association has said would be reasonably simple given banks already have the systems in place.
Reserve Bank figures show interest-only mortgages accounted for about 41 percent of all new lending in May, up from 38 percent in January when it first started collecting the data. Of existing home loans, interest-only mortgages totalled $60.82 billion as at March 31, or 28 percent of the $213.7 billion total loans.
(BusinessDesk)
Paul McBeth
Tue, 12 Jul 2016
Tue, 12 Jul 2016
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No change on interest-only loans from BNZ, ANZ, ASB
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