Non-bank lending balloons

This lending was funded by the increased deposits these companies were able to attract at a lower cost of funding, RBNZ says in its latest financial stability report.

The central bank says non-banks tend to focus on market niches in which banks are less active.

It says the risks to the financial system from the increase in mortgage lending by finance companies “are likely to be limited.”

It notes about 80% of these mortgages have been provided at loan-to-valuation ratios (LVRs) of less than 70% at the time of origination and the share of finance company loans that are non-performing remains low.