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.
Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription, an Idealog t-shirt and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).