Bank bosses disagree with a view offered by many mortgage advisers and property investors that they are rationing credit, making it harder to for people to buy houses.
“There’s this myth going round that banks have tightened up on lending,” outgoing BNZ chief executive Anthony Healy says.
“All we have done is applied the Reserve Bank’s LVR restrictions.”
He admits it’s pretty tough to buy a house after what the Reserve Bank had done, but he also says that it’s “healthy that the market has softened.”
“If you’ve got a 20% deposit and you service your mortgage, or if you’re an investor, got 40% and can service that loan we’ll lend you the money. We haven’t changed our credit criteria, we’ve just applied Reserve Bank’s rules.”
He describes the restrictions as more like dials then levers and the central bank will “adjust them over time".
“I take them at their word when conditions are right they will adjust their settings,” Healy says.
Westpac chief executive David McLean also disputes the notion that banks are credit rationing.
“We’re not seeing it, and we’re certainly not doing it,” he says.”I’m not seeing it in the market.”
However, he says that in the past two or three years, when house prices have really been growing very quickly, Westpac has looked at its lending criteria.
“We, and the Reserve Bank, have tightened up lending. The over-80% LVRs was an obvious one.
“We’ve tightened a number of other offshore investors. We don’t lend to people who don’t have a base in New Zealand because it’s too hard to verify their income.
“However, as far as we can see, there’s no particular tightening of credit at the moment.
“There’s no evidence of it,” he says.
Westpac, like BNZ made a point it its recent results of showing how the Reserve Bank’s lending restrictions have impacted the market.
In the following graph it shows when RBNZ restrictions were implemented and what happened to the housing market.