Lending criteria to ease, rates to rise

The agency has released its latest report on the outlook for New Zealand’s banking sector and it predicts a year of consolidation following an easing of housing related risks.

A marked slowdown in the housing market has led to a more recent slowdown in credit growth and that means the risks posed to the bank sector by housing are likely to have peaked.

As an example of slower credit growth, the report highlights that both loans to investors and interest-only loans are down significantly in both volume and value.

Investors’ loans dropped by 25% year-on-year, while interest-only loans were down by 20% year-on-year and down 40% from July 2016.