Kelly Eckhold: Westpac Chief Economist on lending rates increasing 20% year-on-year

Consumer confidence could be turning around as borrowing rises. 

Latest data from credit bureau service Centrix shows residential mortgage and household lending have both increased more than 20% year-on-year. 

Personal loan and Buy Now Pay Later applications and business borrowing are also up. 

Westpac chief economist Kelly Eckhold told Andrew Dickens we're heading in the right direction, but it's still early days. 

He says many of the indicators for growth are still subpar but lower interest rates are starting to flow through. 

LISTEN ABOVE 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
All right, finally some good economic news and more people
are getting mortgages. Centric data out today shows new residential
mortgage lending is up over twenty percent year on year
for the second month in a row. So to discuss this,
I'm joined by Westpac's chief economists Kelly Echold. So Hello, Kelly,
good morning. Does this mean the economy is back on

(00:22):
track or what?

Speaker 2 (00:23):
Well? I think it's sitting in the right direction. It's
still pretty early days yet, and many of the indicators
for growth for where we are now are still a
bit subpar, but certainly those lower interest rates are starting
to flow through.

Speaker 1 (00:36):
How much of us new lending is from first home buyers.

Speaker 2 (00:40):
There is some of it, although I would have to
say that when we look at the credit statistics, we
actually see the investors are the strongest part of the
market so far, but some of the early indications we've
seen in the last few months suggest that the more
kind of like low income marginal buyer is more important.
So that's the first time buyers there.

Speaker 1 (01:01):
So the investors are that because the tax thing that
happened after the last election, and finding the interest rates
have fallen.

Speaker 2 (01:08):
Yeah, Well, I think particularly it's the lower interest rates
that are important for the investors. It just means that
that hurd or rate of return you need to beat
is a bit lower. And obviously the tax changes that
were brought in by this government as well are obviously helpful.

Speaker 1 (01:25):
So of course we all look to the RBNZ and
the Reserve Bank and try to figure out what they're
going to do next. Will they be hearing you today
looking at these numbers and thinking they've done enough or
do you think we're still on track for another cut
this month?

Speaker 2 (01:39):
Well? I think we're still on track for another cut
this month. I mean, most of the data, as I've said,
has been a little bit subpar. Actually, I think they
might have been a little bit worried about that. But yesterday,
for example, we did get a really good month of
building consens number and it sort of went up to
seven point two percent for the month. That was the
first the third big month in a row, so that

(02:00):
will be relieving them. I think that the things are
starting to pen out is expected. The interest rates have
gone down a long way and that's the leading edge
of the recovery, but there's still quite a long way
to go here, and it is just one set of
indicators as well.

Speaker 1 (02:16):
So you had a good profit yesterday, up sixteen percent.
A net profit of one hundred and ninety seven million
dollars actually is up thirteen percent. So how much can
we thank this increase in lending for your success over
the course of this year.

Speaker 2 (02:31):
Well, I mean the lending growth has actually still been
a bit subpar. I mean that it is actually starting
to improve. So I mean, if we look at business lending,
for example, it's finally poked up to around looking at
my number here, three point seven percent, So that's sort
of the highest level since about twenty twenty three. I mean,
I think we're looking forward to a better operating environment

(02:52):
for the whole economy in the next year.

Speaker 1 (02:55):
All right, So are we beyond green shoots? And do
we Are we actually starting to poke out of the ground.
I'm just saying for a metaphor or an allegory that
you know that she fits us.

Speaker 2 (03:06):
No, I think we're actually just seeing the odd green
shoot poking out at the moment. We need a bit
of water on it, basically in a bit of time,
so that you can actually see something a bit more
than that.

Speaker 1 (03:17):
Well, Kelly Echold, I thank you so much for your
Time Today. Kelly Echold is the senior economist from Chief
Economists from Westpac. For more from Early Edition with Ryan Bridge,
Listen live to news Talks.

Speaker 2 (03:29):
It'd be from five am weekdays, or follow the podcast
on iHeartRadio