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By Renju Jose and Lucy Craymer
WELLINGTON, May 2 (Reuters) - New Zealand's central bank
on Tuesday said it was not seeing widespread financial distress
among households or businesses but warned more borrowers could
fall behind on their payments this year given the expected
weakening in the labour market.
Household balance sheets remained resilient, with most
households with a mortgage still having substantial equity
buffers partly due to the impact of previous loan-to-value ratio
curbs, Deputy Governor Christian Hawkesby said in a statement.
Mortgage rates in New Zealand have risen sharply in the past
year putting pressure on homeowners and businesses as the
country's central bank has increased the official cash rate to
5.25% from 0.25% in October 2021.
Adding to homeowners' woes, house prices have fallen more
than 16% since their peak in November 2021.
"We are not currently seeing widespread financial distress
amongst households or businesses, which reflects the strength in
the economy and labour market to date," said Hawkesby.
"However, more borrowers may fall behind on their payments
this year, given the ongoing repricing of mortgages and expected
weakening in the labour market," he added.
He said that the recent profitability and strong capital
positions of New Zealand banks puts them in a good position to
take a long-term view and support their customers.
(Reporting by Renju Jose in Sydney; Editing by Chris Reese and
Sonali Paul)
Messaging: @renjujose))
