Mortgage industry given reassuring words on coming recession

Advisers have been given some words of comfort that the coming recession might not be too deep.

The comments came from the independent economist Cameron Bagrie, speaking to a webinar put on by the brokers lobby group, Financial Advice New Zealand.

A recession has been forecast by a range of groups including the Reserve Bank and is now seen as virtually inevitable.

It comes as advisers face higher costs due to ever more onerous compliance obligations at a time when the real estate market is shrinking.

Combined, these two things mean a recession is the last thing they need.

But Bagrie had some words of comfort for them, saying the recession would come from a high base.

“Recessions involve change, things heading backwards,” he said.

“But for a lot of economies, things have been so damned good, we are so up in the success line, that if we pull back a little bit, it might satisfy the technical definition of a recession, but I characterise it as something less good rather than absolutely bad.”

Bagrie said levels count, and things had been so good for the past few years, that a pull-back might tick the box and qualify as a recession, but real economic conditions would still be good for a lot of businesses.

In his talk, Cameron also questioned the quality of state rulemaking, citing the Credit Contracts and Consumer Finance Act (CCCFA) as an example.

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