See how bank mortgage registrations have spiked since 2012 and which bank is winning.
Auckland properties are being flipped, financed and refinanced like never before amid the city’s hot real estate market and cut-throat competition between banks.
A Herald Insights data analysis of all New Zealand’s 1.7 million property titles has revealed a sharp spike in bank mortgage registrations since 2012, with 40 per cent of all mortgages now less than four years old.
The surge in activity — shown in a graphic in today’s The Business magazine — is concentrated in Auckland, which has a third of mortgage activity but only a quarter of property titles.
The data concludes the median age of mortgages held by banks is now four years.
Massey University associate professor David Tripe said while hard historical data was difficult to come by, this appeared to be a big decline from the 1990s when the average age was closer to seven years.
Banks themselves put the rise down to buoyant activity in the real estate market and mercenary behaviour by borrowers who are more likely than ever to switch banks when offered inducements.
But economist Shamubeel Equaab said the spike should raise alarm bells, particularly against the backdrop of price rises in Auckland. While noting the data indicated a competitive market for lending, he said the greening of bank mortgage books came with risks.
“Worryingly it also suggests that much of the mortgage book also represents very new borrowing — at a time when prices are so high they are mismatched with borrowers’ incomes or rents and are uneconomic.”
Westpac’s chief product officer, Shane Howell, said increasing churn in the mortgage market was partly caused by intra-bank poaching where the cash was being flashed.
“There’s offers and incentives of the likes we haven’t seen for ten years. There’s cashback and flatscreens, and there’s also a lot of enticements to keep people to stay put,” he said.
BNZ’s director of retail and marketing, Craig Herbison, said the pace of the market was quickening. “That’s really a feature of securities and houses turning faster than previously,” he said.
The “quite heavy refinancing market” was also fuelled by a preference by borrowers to opt for fixed-term loans, he said. Expiration of these deals then acted as a spur for rate-shopping, he said.
Mr Tripe said the growing number of borrowers switching banks and a rising level of inducements being offered wasn’t unprecedented, but it hadn’t been seen at these levels since the boom of the early 2000s.
“It’s not necessarily more common than it was 10-15 years ago when banks were falling over themselves to poach each other’s customers,” he said.
The Herald analysis shows ANZ has been the most successful poacher and signer of new business in Auckland with nearly a third of all such business this year. The growth will likely see a changing of the guard later this year when ANZ is on track to overtake ASB as the city’s largest mortgage provider.
The data also confirm Auckland to have the most-leveraged homes in the country, with almost two-thirds of properties in the urban area subject to bank mortgages.