Soon to be tighter lending restrictions have yet to slow down investor applications for home loans, Kiwibank's chief executive says.
The loan to value ratio restrictions on bank lending are due to come back into force from Monday March, 1 meaning banks will only be able to do up to 5 per cent of loans to investors with a deposit under 30 per cent and 20 per cent to owner-occupiers with deposits under 20 per cent.
It will then be tightened further on May 1 for investors with banks only allowed to do 5 per cent of lending to investors with deposits under 40 per cent.
Speaking after its half-year financial result today, Kiwibank chief executive Steve Jurkovich said it had yet to see any slow down in appetite from investors.
"No we haven't seen any slowing. I think we probably would expect to see slowing later in the year but at the moment no."
He said one of the challenges around the applications that every bank would be faced with was for every house sold at auction there could be up to nine people who missed out and one person who wins.
"There is a lot of applications out in the market that may not turn into deals. There is a lot of work and a lot of volume going on."
Jurkovich said the 40 per cent LVR would stop some applications from going through.
"It always has the biggest impact at that margin. So if you are close to that 40 there will be people that won't put their hand up to do more so yeah it will work, it's just a matter of time."
The bank reported a slight rise in its half-year result of $4m to $55m. But its credit impairment losses were non-existent.
Jurkovich said all banks had enjoyed the fact that over the year the anticipated impairments hadn't emerged yet.
Asked if they were still coming he said he expected there to be a lot of phone calls from the banking industry in March and April asking those that were still on Covid support what their plan is.
"Overall numbers around the number of customers left on Covid support across the industry are way lower than we had anticipated.
"We had 8000 customers business and retail looking for support now we are down to nearly 700 home loan customers, 30 odd overdrafts and 70 credit cards.
"That gives you a feel for how much those numbers have dropped."
But those remaining on Covid support packages are likely to also be the ones that need it most.
Jurkovich said the pandemic had been pretty unfair on some industries.
"It has really impacted tourism and businesses that were relying on these influxes of visitors and what has been the backbone of New Zealand tourism those offshore big vendors.
"I think it has been really tough on those industries who literally ran out of customers overnight and no business can really progress through that."
He said while it was fashionable to talk about how these businesses should pivot that was a tough thing to do if there were no customers turning up.
One positive from the rising housing market was that if some homeowners had to sell they would not be left in debt.
"Given the rising property prices across the country there will be very few customers that couldn't sell and come out okay.
"That is quite different to a GFC situation where prices are under pressure, interest rates and costs have been building and you need to sell. Now I think most who need to sell their property, it would be worth more than it was a year ago."