Adjustments may be a regulatory headache

The bank’s latest GDS seems to show that lending to people with a deposit of less than 20% actually increased in the September quarter, as other banks were winding down their low-deposit lending ahead of the LVR restrictions.

For the September quarter, 22.5% of the bank’s new lending was to people with an LVR of 80% or higher, up from just 3.2% the previous quarter.

The bank says the discrepancy is because it adjusted its June quarter accounts and overall the trend has been for declining high LVR lending. The bank is believed to have reclassified a number of mortgage borrowers, which resulted in them being accounted for in the GDS as new borrowing, when they were in fact existing customers.

At the end of September, the bank had $6.751 billion in loans to people with LVRs of between 80% and 89%, and $3.939 billion in loans to people with equity of less than 10%.
Massey University’s Claire Matthews said the bank’s low-deposit lending had increased slightly compared to the year before. “You would expect them to have started to slow down at this point.”