Thirty-one years ago Kiwi banks dedicated just ten percent of their lending to the housing market. A bit went to the government and some more to other household lending—cars, colour TVs, perhaps the new Sinclair ZX80. Business claimed a solid 71 percent of banks’ portfolios.
Somewhere along the way banks decided they’d rather lend to homeowners. Mortgages now make up over half of bank lending.
The result? Easy mortgages, a runaway housing market, and pretty soon punters are spending all their readies on mortgage interest while business owners find themselves begging for even small loans. In turn, growth and employment suffers.
Perhaps the saddest statistic? Non-mortgage lending to consumers—much of which is for the fun stuff, like boats and travel—has slumped for a little more than the total mortgate lending, to one- eighteenth. Mortgages are much less fun.