ANZ sets record for home loans
ANZ has reported the biggest ever quarterly increase in home loans.
Monday, August 20th 2012, 2:59PM
by Jenny Ruth
ANZ Bank's mortgage book surged by a record $1.09 billion in the June quarter, increasing its market share for a second successive quarter.
Until the last couple of quarters, ANZ's share of the mortgage market has been mostly trending lower since it took over National Bank in 2003, although it remains New Zealand's largest home lending bank by a significant margin.
ANZ's June quarter disclosure statement shows its mortgage book grew $1.09 billion in the three months ending June 30. The previous record quarterly growth for any bank, $880 million, was by Kiwibank in the December 2008
ANZ New Zealand chief executive David Hisco says the growth reflects the build up of work the bank has put in over the past 12 months.
"We've basically pulled apart our home loan process and put it back together again with the whole idea of making it easier for customers and for staff. It seems to be working," Hisco says.
The bank has instituted more than 50 processes, increased training of front-line staff and given more of its front-line people discretion to approve home loans on the spot.
Most of the growth, $571 million, came from mortgages with loan-to-valuation ratios (LVRs) between 80% and 90%, followed closely by $568 million growth in mortgages with LVRs below 80%. Mortgages with LVRs above 90% shrank by $47 million and now account for 8.18% of ANZ's total book, down from 8.44% three months ago.
Hisco says while there are often good reasons to approve loans with LVRs above 90%, "if you do it above 90% by loosening standards, you will only do it for a short while."
ANZ's deposit book (excluding wholesale deposits and debentures) grew by a modest $55 million in the quarter and by $1.62 billion in the year ended June 30.
"This year, we've raised more deposits than we have lent money, so we're in good shape," Hisco says.
Chief financial officer Nick Freeman says the bank's core funding ratio continues to improve.
ANZ's net profit for the three months ended June 30 rose 36.2% to $350 million and was up 31.3% to $965 million in the nine months ended June 30. Charges against for bad loans were up slightly to $48 million in the June quarter.
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The OCR ain't going anywhere
The new Reserve Bank governor, Graeme Wheeler, predicts that the official cash rate won't by going anywhere until 2014.
This is clear from the 90-day bank bill forecast graph in the December Monetary Policy Statement. It shows clearly how over the past year forecast increases kept getting pushed down each quarter.
A year ago the bank was predicting the 90-day bill rate would be up at 4.00% by March 2014. That forecast was wound back to 3.3% in March, 3.2% three months later and is now down at 2.8%.
The good news for borrowers is that, asssuming things pan out as forecast, then home loan rates aren't likely to be going up any time soon either.