As mortgage lending declines, banks look for new ways to attract

The weather in Auckland is cold and gray, but the solar panels are still flying off the shelf.

Banks are now competing for customers to take out low-interest or interest-free loans to make their homes warmer, prompting many Kiwis to make the decision to go solar.

It comes as Reserve Bank data shows there was about $6 billion in new residential mortgages in June, up from $8 billion in the same period last year.

The drop affects both first-time home buyers and other homeowners, which is good news for the Reserve Bank’s goal of curbing inflation, but forces banks to look for new ways to attract customers.

Auckland owner Peter Clarkson sees home heating improvement loans as a great opportunity to switch to solar power and reduce the amount spent on electricity.

“[It’s] a very good investment, to encourage people to get solar power, electricity keeps going up and that makes it more affordable for the normal person,” he said.

Westpac is now extending its “Warm-Up” loan by offering 0% interest.

Westpac chief executive Cathrine McGrath said the extension would save New Zealanders money and improve their homes.

“It’s $40,000, so you can do great things to make your home drier and warmer and it also helps the environment.

“It really makes sense to lend for home improvement, it lowers the cost of builds, it helps make homes warmer, and in the process, it makes Aotearoa better because we rely less on the traditional forms of heating and energy,” McGrath said.

ANZ and KiwiBank also offer sustainable loans.

Andrew Eagles of the Green Building Council wants to see more Kiwis use these loans to make their homes warmer.

“30-40% of Kiwi homes are damp and moldy, the more options the better, we would like to see more Kiwis insulate those homes, making them warm for their whānau,” he said .

“For every dollar invested in home insulation, the New Zealand healthcare system gains $5.”

As many choose to make their homes warmer in an environmentally friendly way, the demand for solar panels has skyrocketed as the need for traditional energy sources declines.

Guy Coleman of Harrisons says the number of people working from home is driving these requests.

“People working from home and using electricity from home, not electricity from the company, so they have the electric bill and went ‘we have to do something about this’ and so that prompted many people to contact us,” Coleman said.

Homes and buildings account for 20% of New Zealand’s greenhouse gas emissions.

There are now calls for these offers to go further.

“What we see in much of Europe are these offers complemented by a government subsidy because that makes them much more accessible for Kiwi whānau,” Eagles said.

Coleman said he “would love to see some government action as well.”

While retail banks are throwing money at customers, the Reserve Bank is trying to reduce the amount of cash floating in the economy to reduce demand and inflation.

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