Massive Increase in Mortgage Demand

Massive Increase in Mortgage Demand While the Commercial Sector Returns to Lending

MEDIA RELEASE 15 August 2012

Latest data from leading credit bureau Veda shows renewed confidence amongst New Zealanders to borrow for homes and their businesses.

For the first time in five years Veda’s bureau statistics show an increase in commercial enquiries, which Veda’s Managing Director John Roberts says is enormously positive for the economy.

Businesses owners require a level of confidence in future growth to borrow funds to invest in their operations and expand.

“Business has hung in through a slow economic recovery. An increase in enquiries is a welcome sign of emerging stimulation in the commercial sector.”

Commercial credit enquiries, relating to business lending, increased by nearly seven percent for the May-July 2012 quarter compared with the same period last year. Parallel to this, credit defaults listed on commercial credit files fell significantly in the same quarter revealing the sector is moving on from the pressures related to the global financial crisis.

Mortgage enquiries increased a massive 44.36 percent for July 2012 compared to the same period last year. Generation X (28-43 years age group) has shown the greatest shift with mortgage enquiries increasing 49.40 percent for July this year compared with July 2011.

Mr Roberts believes a highly competitive housing market both in terms of consumer demand and access to stable interest rates has driven this increase to relatively low cost funds.

“With the Reserve Bank’s Official Cash Rate remaining at 2.50 percent since March 2011 the banking industry has fiercely competed to attract new customers with very competitive interest rates - this is causing consumers to shop around to get the best home loan deal they can.”

Mr Roberts also observes that a battle between banks in fixed home loan interest rates appears to be driving a slow shift from floating interest rates to fixed interest rates.

Veda data highlights growing consumer demand for credit with inquiries up by 8.75 percent for the quarter May to July 2012 on the same period last year. This is the second consecutive quarter showing an increase in enquiries indicating a slow return to growth in the consumer credit market. The month of July saw credit inquiries increase by 9.14 percent on July 2011.
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