During the interview, Shortt then went on to other topics, including the sourcing of loans. She said there was a slight rise in the number coming via brokers, but it was not a huge increase, and the ratio remained half broker-originated, half bank walk-ins.
And she paid tribute to the work of mortgage brokers.
“They are an important part of the market, we support them, we have a strategy of supporting them, and that strategy is unchanged.”
Shortt was also worried about the dangers of inflation, which some people had thought might be transitory but was far broader and more persistent than that, and was affecting every household. This would cause the OCR to rise by at least 200 basis points by the beginning of next year.
Shortt also brought up the impact of the recent surge in home building. She said if that continued, and immigration stayed where it is, there would be an excess of supply of houses over demand by 2024, and “that's not very far away.
“There's still quite a large imbalance this year and next year, but given all the construction of housing coming on stream, and given the lack of immigration, 2024 is when we think we will see a surplus.”
According to traditional economics, this could produce a problem for the banks, since an oversupply of goods can cause a fall in prices. And that could bring a debt overhang for houses purchased on very low deposits.
But Shortt said this was just one of many factors – others included DTIs, LVRs and immigration settings. These things could change, or come and go, and there was no one factor that banks like hers relied on to set their policies.
Shortt also discussed the impact of rising interest rates. It is standard practice for banks to have a “test” rate or a “loan serviceability rate”. This is an interest rate higher than prevailing interest rates, and is used to assess a customer's ability to keep on paying if interest rates rise overall.
“Our test rate is 6.45% and we are confident that the business that we are writing today adequately considers the rising interest rates that customers are facing.”
On KiwiSaver, Shortt was asked how KiwiSaver clients had responded to volatile capital markets.
“In 2020, when Covid was first coming onto the scene and we had market volatility, we did see some people moving their KiwiSaver balances.
“This time around, a lot of people have learnt from that, and we are making sure that we are proactively trying to encourage customers to take a long term view.
“There has been quite a lot of market volatility this year and the switching (between KiwiSaver products) has not been anything like what it was.”
Shortt was also asked about the bank's trumpeted $21 million reduction in fees and how much was driven by Financial Markets Authority (FMA) concern about conduct and culture.

That reported a cash net profit after tax (NPAT) of $742 million for the 6 months to 31 December 2021.
That was a 22% increase on the prior comparative period.
Statutory NPAT was slightly higher at $762 million, an increase of 23%.
One reason was an 8% growth in total lending.
Shortt was dismissive.
“They (FMA) don't make our passing decisions, these are our choices ….. the majority of those fees are fees for business customers which have nothing to do with FMA views.”
And doing better than a rival bank played a big part in moves to adjust bank fees.
“They are definitely our choices .,.... it is a competitive market, there are more and more providers, it is competitive.”
Shortt went on to say there had been little change in the floating rate / fixed rate balance. The vast majority of people used fixed-term lending and had done so since the Global Financial Crisis of 2008.
On property investment, the story was mixed. Some people were leaving the industry and some were staying in, but there was not enough of a trend for the bank to be concerned.