Results released today show Westpac has reduced its proportion of lending above 80% LVR by about 1%, to 21% of its portfolio.
Ian Blair said there had been a lot of talk about how the Reserve Bank could ensure that a housing bubble did not blow out. “Lending responsibly is part of that. We want to stay on the front foot. We don’t want to see the market overheating.”
Earlier this week, the bank introduced a 25 basis point margin on loans between 80% and 85%.
The Reserve Bank is issuing its financial stability report next week, which is expected to include a hint as to how it will use macroprudential tools. It is widely believed that the most likely tools to be implemented will be LVR restrictions.
The New Zealand unit of the Westpac group reported earnings up 7% to $370 million in the six months to March 31, on the back of more lending in mortgages and agribusiness and fewer bad loans.
Lending grew to $59.9 billion,up 3% on the same time last year. Home loans grew 3% to $36.4 billion. About $2.5 billion of its lending is above the 90% level.
Westpac has about a fifth of the mortgage market and had previously heavily advertised its low-deposit options to first-home buyers.
