1 Jul 2013

Household borrowing gathers pace, RBNZ figures show

9:09 am on 1 July 2013

Figures from the Reserve Bank of New Zealand show credit growth, including mortgage lending, is accelerating.

The figures show credit to households grew 0.5% in May and that the annual pace of growth in the past three months has been 6%.

Mortgage lending by registered banks rose by $1.32 billion in the month, up from $983 million in April and more than double mortgage lending in May last year.

ASB Bank economist Jane Turner says the strong growth highlights the Reserve Bank's concerns about the strength of the housing market.

She says there has been acceleration in the pace of housing credit growth, which reflects an increase in housing turnover and strong house price growth in the last 12 months.

Ms Turner says a recent Reserve Bank communication highlights that much of its concern is about the increase in the level of high loan to value lending, rather than an acceleration in credit growth alone.

The figures show household deposits grew at an annual pace of 9.9% in May, down from the 10.2% growth in April but up from the 8.3% growth in May last year.