Banks clamp down on lending
Lending is becoming more difficult to get for many people as banks exercise more caution.
Auckland Property Investors Association president Andrew Bruce said a number of developers were finding it harder to get finance for deals. Where banks had previously been willing to lend to big projects such as new apartment blocks, he said they were now more cautious.
‘‘I guess we are getting towards the tail end of this apartment cycle. Banks are making it a bit tougher,’’ he said.
He said investors had been warned about a ‘‘funding gap’’ as banks struggled to get in enough deposits and faced demand for high levels of lending.
Economist Shamubeel Eaqub agreed there had been a change.
‘‘If you look at what’s going on in the development sector, and we know anecdotally through mortgage brokers, there has been a change. It’s not surprising. Banks are classic fairweather friends. When things are going well, they lend lots. When it’s not going so well they don’t want to be anywhere near.’’
Banks were finding it harder to make money, he said, and were pulling back from the sectors that were seen as riskier.
The number of home loan approvals is down almost 5 per cent compared to the same 13-week period last year. Eaqub said it was not clear whether that was a blip as a result of the new loan-to-value ratios imposed on investors, or the start of a bigger change.
In Australia, BNZ’s parent, National Australia Bank, has compiled a confidential borrowers’ blacklist of more than 600 towns and suburbs where it has capped lending to property buyers because of growing risks in the housing market.
NAB’s move comes two weeks after chief executive Andrew Thorburn told a parliamentary inquiry into banking that net interest margins were being squeezed at a time when banks are facing higher capital requirements.
Other banks across the Tasman, including Westpac, were also due to announce a tightening of their lending criteria.But New Zealand banks have rejected the idea that they have made a formal policy shift. ASB and Westpac said there had been no change.
ANZ said it was still lending for the development of city and suburban apartments subject to its lending criteria.
‘‘We consider all applications on a case-by-case basis and encourage customers to talk to us about their individual situation and needs.’’
Kiwibank said: ‘‘We continue to facilitate quality property development lending within our current risk appetite.’’
But banking expert Claire Matthews, of Massey University, said it would not require a formal change for banks to start pulling back.