Reserve Bank statistics show that the value of new home loan approvals in the first week of November slumped to $932 million, from almost $1.3 billion a year earlier and $1.2 billion as recently as August.
The number of approvals in the 13 weeks to November 1 was more than 4% down on the same period the year before.
Loan-to-value restrictions introduced at the beginning of October mean banks must keep their new low-deposit lending to no more than 10% of their new loans.
New Zealand Home Loans chief executive Mark Collins saidHmost banks were lending only up to 4% of their loans to low-equity customers, because they wanted a significant buffer to keep them on the right side of the rules.
“They’re saving it for their existing customers who want a top-up, even though in reality there’s nowhere else for them to go.”
He said banks were more keen to hold on to their sub-80% business than they were to attract new business in that bracket.
“We’re used to presents, cash and discounted rates for new business but now if you’re an existing customer they’ll give it to you too if you are thinking about leaving.”
One customer had been given $5000 and 150 basis points off a floating rate to stay with a mainstream bank, he said.
The refinancing market had slowed, he said. “There’s a bit less portability in the market although if you have a loan of less than 80%, you can probably drive a very good bargain.”
