Bank lending improves - survey

Banks’ attitude to mortgage lending has markedly improved since this time last year, First National Group’s monthly survey has found.

Coupled with low interest rates, the lending improvement bodes well for winter sales activity, the Group says.

First National’s monthly internal survey which measures sales volumes, enquiry levels, listings and market trends, reflects the views and experiences of the network’s 65 offices and 450 real estate agents.

This month, agents were also surveyed on bank lending attitudes.

Of the total responses, 58% of agents felt banks were more relaxed in their lending and access to mortgages was easier for borrowers compared with last April. Thirty-three percent felt mortgages were still generally difficult to access, and 9% felt it had gotten even more difficult than the same time last year.

Agents were also asked their opinion on the most mortgage friendly bank in their region. Thirty percent of agents said no one bank stood out but of the remaining 70%, Westpac topped the poll at 14%, followed by National and ANZ (12% each), BNZ (10%), SBS (8%), ASB (6%), Kiwibank (4%) and CBS and the Nelson Building Society tied on 2% each.

First National Group general manager John Stewart said the overall perceived relaxation in lending would help buyer and seller confidence coming into winter.

“While lending policies or criteria may not have officially changed, the attitude of lending officers has a lot to do with whether the mortgage is even likely to be approved and that was what we wanted to get a feel for.

“We are seeing banks lend up to 95% of valuation again despite property prices having dropped since April 2010. Perhaps this is a reflection of banking views that the bottom has been reached in terms of values.”

However, sales were only on par with April last year, and numbers of listings (at 6536) were 10% lower than April last year, indicating confidence was generally low.

“Of greatest concern to us is the totally confusing and at times self-serving comment coming from the banking, non-banking finance and academic economists sectors,” Stewart said.

“In past week some "soothsayers" (predominantly bankers) have told the market prices will fall more so hold off listing till it lifts. Yet within three days others are predicting price increases of up to 4% in the calendar year,” Stewart said.

“One has to wonder whether some of the commentary is designed to keep prospective purchasers from applying for money and also keep term investors happy

in the knowledge that higher returns aren’t far away.

“Confusing statements from commentators about rates increasing early and employment uncertainties mean many people remain spooked from even talking with their bank about a mortgage. Those who do are pleasantly surprised, in the main, with the deals on offer.

“In our view, the market overall is still fairly subdued and has a long way to go.”