More action needed on housing: bank boss

by NZ Adviser28 Nov 2016
ANZ chief executive David Hisco has said borrowers may find it harder to get a home loan in the coming year unless banks find a way to receive more money from the local market, according to the NZ Herald.

"We need to temper the amount of funding we are getting from offshore," he said. "We need local deposits."

As the cost of buying a houses rises and amounts of mortgage lending outpace deposits from local savers, Hisco said banks are facing the problem of borrowing higher volumes of offshore funding where costs are going up.

The amount the major four banks (ANZ, ASB, Westpac and BNZ) have borrowed from offshore funds has jumped about $10billion in the last year, from $80b to around $90b.

"That's quite a large increase in one year and you couldn't expect us to continue to increase like that," Hisco said.

"We need to temper the amount of funding we are getting from offshore.

"We need local deposits. And that also means that banks will look to tweak what they approve so that the volume they require doesn't run away from them.

"We borrow from offshore and we're really no different to a household. There is an extent to what people are prepared to lend us at certain rates and if we want to borrow large volumes we have to pay more and that would flow into funding costs for our borrowers."

With interest rates likely to have hit the bottom, Hisco said this may prompt people to pause in their buying decisions. 

“And it has meant that some investors have put their properties on the market and we're seeing more properties come on the market."

Although the Unitary Plan is progressing, Hisco said the risks were still there.

"This can't be solved by any one party, it can't be solved by the Government, Reserve Bank, banks, councils, or anyone. It requires everyone to take think about what they can do and to take some action.”

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