The sharp switch is clearly the result of the price war in fixed-term mortgages between the banks which began in late April.
While total mortgage lending by banks grew by $752 million to $173.84 billion in June, up from the $612 million growth in May and $393 million increase in April, lending on floating rate mortgages slumped $2.62 billion in May and has fallen $4.57 billion since April.
On the other side of the coin, total fixed-rate mortgages written by banks jumped $3.3 billion in June. Floating rate mortgages now account for 60% of all bank mortgages, down from 61.7% in May and 63.1% in April which was the peak of the trend in place since August 2009 when they accounted for just 22.8% of the total.
The biggest growth has been in mortgages fixed for up to two years. Mortgages fixed between one and two years jumped $1.8 billion to $24.83 billion in June while those fixed for one year or less climbed $697 million to $36.61 billion.
“Mortgage lending growth showed more concerted signs of acceleration over June,” says Nick Tuffley, chief economist at ASB Bank, adding that the July figures are likely to show a continued shift away from floating rate mortgages.
Tuffley says the net mortgage growth in the six months ended June of $2.6 billion is already well ahead of the $1.96 billion growth for all of calendar 2011.
Nevertheless, “the current growth rate is still well below that of the last housing boom.”
Other central bank figures show mortgage approvals continue to be sharply higher than this time last year although they're moderating somewhat.
Approvals eased to 7,046 in the week ended July 20 from 7,179 the previous week and 7,911 in the week ended June 29. However, approvals in the 13 weeks ended July 20 were up 34.2% on the same 13 weeks a year ago.
Overall, household credit grew a seasonally-adjusted 0.3% in June from May, up from 0.2% in May, and was up 1.8% on June last year.
