Catherine McGrath: Westpac CEO on the new research claiming home ownership rates will fall below 50 percent before 2050

Home ownership rates have dropped below 60 percent, and data indicates this figure could get lower.

New research commissioned by Westpac says home ownership figures will fall as low as 50 percent by 2050.

The bank has since pledged to lend $1 billion over the next three years to fund affordable housing.

CEO Catherine McGrath says it's critical to ensure home ownership becomes available to more New Zealanders. 

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Episode Transcript

Speaker 1 (00:00):
Here the dupless ls.

Speaker 2 (00:02):
So fewer than sixty percent of us now own our
own homes. Now, apparently that is going to fall even
lower to below fifty percent by twenty fifty. This is
according to new research has been commissioned by Westpac. So
the bank is now going to make it easier for
low to middle income owners to buy houses via shared equity,
leasehold or rent to buy schemes. And Katherine McGrath is
Westpac's chief executive.

Speaker 1 (00:20):
Hey Catherine, Hi, Heather, how are you?

Speaker 2 (00:23):
I'm very well, thank you. So what's the planner you
guys going to lend a billion bucks over the next
three years to community housing providers?

Speaker 1 (00:30):
We absolutely want to, and we want to lend even
more than that if possible. We're a big believer in
home ownership bring a real range of benefits and it's
critical that we look at different ways of doing that
because home ownership is increasingly becoming less affordable for more
New Zealanders.

Speaker 2 (00:45):
So how much demand is there from these community housing providers?

Speaker 1 (00:50):
So we're starting to seeing increasing levels of demand as
potential home buyers understand that there are cheap ways of
getting into their own first home. But in order to
do that you need to be prepared to think about
some of those different models like shared equity and lease
hold because it makes it more affordable.

Speaker 2 (01:10):
Can you quantify the demand? I mean, if you guys
are talking about lending a billion, is the demand a billion?
Is it ten? One hundred?

Speaker 1 (01:17):
Well, what our research estimates is that one hundred and
fifty two thousand KIVI households could be eligible for these
sorts of shared ownership past phase, but only a third
of the people are aware of the option, and so
we want to get this profile up some more people
know that there are a range of options for them.

Speaker 2 (01:33):
How much are you stepping it up, right to get
to a billion if billion over the next three years.
How much have you done in the last three years.

Speaker 1 (01:41):
Sorry, don't have that at the top of my fingers,
but we think that's a good stretching target. But as
I said, I'd really love to do quite a bit
more than that.

Speaker 2 (01:48):
Because the reason I'm asking these questions is because while
a billion sounds like a lot in terms of your lending,
it really isn't right. I mean, the three years you
did forty five billion of new mortgages home first home
buyers thirty four million of business loans for commercial property.
So it's kind of small, isn't it.

Speaker 1 (02:04):
But it's a growing it's a growing area and there
are a number of different ways of getting into it,
and so we think there's a target for this particular
type of lending. It's a good target, and it's putting
a profile on something that we can do with some
light being shot on.

Speaker 2 (02:17):
Yeah, and then what else are you prepared to do?
Are you prepared to perhaps lower the interest rates, tack
on more risk, do anything like that.

Speaker 1 (02:24):
So firstly, we've already changed our risk appetite in terms
of how we think about lending to community housing providers,
so that's been an important thing. We've already made some
graph changes in terms of how we assess the lending
for the individuals because obviously if you're lending over lease
hold or shed equity, different to the traditional model. And

(02:44):
then finally, as we see more barriers come up, whether
it have to do with risk appetite or anything else,
then we will walk our way through it. Because what
we'd really like to be able to do is to
simply say, yes, how do you feel.

Speaker 2 (02:57):
About the Commerce Commission? You will have seen this by now,
Commission looking into the old payway fees.

Speaker 1 (03:04):
I think it's great that the Commerce Commission looks into
whether they think kiwis are getting good value, and so
we'll read the report with interest.

Speaker 2 (03:11):
What do you reckon? Do you reckon we're getting good value?

Speaker 1 (03:14):
Sorry, we haven't. I've seen the headlines, but I haven't
been able to look at it in detail.

Speaker 2 (03:19):
Do you not do you? I mean, because you guys,
this is your bread and butter as a bank, what
do you reckon?

Speaker 1 (03:25):
I think what they're particular looking at as the visa
and master cad vies. So that's not an area that
I've spent a lot of time looking into.

Speaker 2 (03:34):
Do you have any view on when we're going to
get an OCR cut?

Speaker 1 (03:39):
So our economists are saying that that will happen in November,
likes mortgages. I'm hoping it could be earlier than that,
but the currently the Westpac teams view as November.

Speaker 2 (03:51):
Yeah, Catherine, Okay, So I mean it wasn't that long ago, right,
It was just a few weeks ago that we were
talking about May at the earliest. Maybe some were saying February,
and anybody calling novall was an outlier. Right now, the
consensus seems to be November. You reckon it could be
even earlier.

Speaker 1 (04:06):
Well, I think some in the market are saying that
it could be. And what's great is I think there
was this bank is responding to what they can see
happening in the market and the.

Speaker 3 (04:14):
Data that we've got. So the CPI getting that close
to three percent in the most recent announcement, I think
is telling us that things are changing at reasonable pace,
and it's good to see that the tone of the
RBNS has changed reflecting some of that new data that's
coming out.

Speaker 2 (04:31):
Are you seeing people with lending with you guys having
a bit of a tough time.

Speaker 1 (04:36):
We've been able to see a steady a steady increase
in terms of people finding it a bit tougher. What
we're definitely seeing is that homeowners, as far as possible,
are prioritizing those mortgage payments. But you can definitely see
strain coming through the system for businesses and homeowners, and
the sectors that are particularly impacted areas like possible talenty

(05:00):
and the fact that our retail has been has gone
backwards five months and New Zealander is telling you that
all of us are just tightening our belts a bit
and that obviously hasn't real impact on those industries.

Speaker 2 (05:11):
Yeah, fair enough. Hey Catherine, thank you so much, Really
appreciated a lovely to talk to you. That's Katherine McGrath,
wespec's chief executive. For more from Heather Duplessy Allen Drive,
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