Westpac expects lift in NSW

Westpac's mortgage business is following market trends in Australia, and gaining market share in New Zealand. In Australia total housing loans increased by 12 per cent for the year to $125 billion, with the second half showing strongest momentum with growth of seven per cent.

New Zealand residential lending recorded 16 per cent growth to $24.8 billion, but was overshadowed by the weak three per cent growth in the second half (and not quite consistent with the rest of the "turnaround" story being sold by management for the New Zealand division).

Residential lending growth in New South Wales was softer at 10.5 per cent with the book supported by stronger demand in Queensland and West Australia.

Morgan though identified three key areas where NSW will improve.

"The NSW economy is absolutely on the way back, partly due to housing affordability due to other Australian locations." Also noted were the strong white collar employment environment and a big pick up in business.

Mortgage loans 90 days past due increased six basis points to 0.31 per cent for the year, with the impact predominately caused by the Australian portfolio due to the impact of higher interest rates.

Westpac said 72 per cent of borrowers with amortising home loans were repaying in excess of the required minimum.