This is not a small number and for all those thinking if this is real or just my fantasy, let me put your mind at ease – it is every bit as real as anything you will ever learn about the current economic climate.
However, to shut down the skeptics right off the bat, let me first and foremost explain my methodology for getting this number.
This data is actually publicly available and I did not do anything fancy or pull any strings inside any government agency to get this information. It is available for anyone to see as long as you know what you’re looking for.
On the Reserve Bank of New Zealand’s website, there’s a section called the Financial Dashboard.
It looks like this:
I want to draw your attention to two specific items in the dashboard.
The banks’ balance sheet and the credit concentration.
A deeper dive into the balance sheet shows a picture like this:
Now add up the total for ANZ, BNZ, Westpac and ASB and you’ll get a number close to $384,220 (this is in millions) or $384.22 (in billions). So the total loan book across these 4 banks is $384.22 billion.
Now go back to the dashboard and see the breakdown of non-performing loans across all banks.
Even though the data is more damning for the second tier banks, for now, I want to focus on the big 4 because the bulk of the lending sits with them.
You will see that the percentage of all loans that are classified as non-performing loans (in other words, “about to default” loans) across the big 4 ranges from 0.4% to 0.6%. Do a simple math calculation like I’ve done below and you’ll see the number comes to 1,959,544,000 –
That’s 1.959 billion.
So now that I’ve proven that the method used is rather sound, let me highlight another few important aspects that are never reported in the media – or at least not in a way the average Joe and Jane can understand.
Below you’ll see an interactive chart showing the New Zealand household debt to income ratio. It’s at 164% currently.
Combine this with the fact that nearly 2 billion worth of mortgages are currently sitting in the Non-Performing class for the 4 major banks, mortgagee auctions and problems are clearly visible for many home owners in the short term.
The purpose of this article is not to spook you. As a SMART Property Investor, you should find comfort in these numbers because while it spells doom and gloom for many, it spells opportunity for the SMART investor.
There are 2 specific solutions we provide here at Property Magnets that could fast track your road to success in today’s property market.
First is our SMART Portfolio Builder course, which is designed to help you build a portfolio of properties at speed and scale never before seen in the property market.
The opportunity is there and the market is already showing signs that are set to favour those that take action NOW.
The second is our SMART Property Alerts system. Its a powerful, interconnected database that picks up distressed properties across New Zealand and Australia just when they hit the market and sometimes even 3-5 days before they are featured anywhere else.
Source: https://bankdashboard.rbnz.govt.nz/summary
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