Loan availability down: survey

WELLINGTON: Property developments are going to struggle to get off the ground as bank lending tightens over the next six months.

The Reserve Bank has conducted a special, out of cycle, credit conditions survey to understand how lending practices have changed since lockdown.

It has found the availability of commercial property loans was already constrained before the lockdown, but had since fallen to a net 38.4% from 10.4%.

Infometrics senior economist Brad Olsen said the outlook was not likely to improve.

‘‘We are going to see developers across the country struggle to get their projects moving, that is for commercial property and also for residential.’’

Banks reported their main focus was supporting existing customers who wanted cash on hand, and new clients were being carefully scrutinised.

Mr Olsen said he expected to see a diverse spread of business loans issued.

‘‘Those businesses who have a clear plan of action . . . are going to find it easier to get access to loans.’’

He said those businesses which did not have their ‘‘ducks in a row’’ would struggle to get help from their banks.

However, he said it cut both ways; he expected more businesses to be cautious taking on debt.

‘‘Businesses may well defer, delay or completely cut out planned capital spending and the need for additional loans in some areas.

‘‘They’re going to be looking out at the economy, figuring there’s not quite as much economic activity.’’ — RNZ