Monthly mortgage debt drops in December for the first time since Reserve Bank records began

Monthly mortgage debt drops in December for the first time since Reserve Bank records began

By Gareth Vaughan

Housing lending fell in December, month-on-month, for the first since Reserve Bank records began, the central bank's latest sector credit data shows.

The Reserve Bank says mortgage credit fell by NZ$50 million to NZ$170.95 billion in December from NZ$171 billion in November. That's the first monthly absolute dollar decline since the Reserve Bank started collecting the data in June 1998. Previously there had never been a month-on-month drop, with the previous low being an increase of NZ$101 million from September to October last year.

The biggest monthly gain recorded by the Reserve Bank in housing lending was NZ$2.2 billion in March 2007.

The fall in mortgage debt comes after the Real Estate Institute of New Zealand (REINZ) said earlier this month that house sales volumes and prices fell in December - from a weak base - compared with both December 2009 and November 2010 as the number of new sales listings dropped and demand softened. REINZ said the volume of sales in December fell 11.3% to 4,397 from 4,957 in December 2009 and 14.4% from 5,138 in November 2010.

The national median house sale price dropped NZ$8,000 or 2.2% to NZ$352,000 in December from NZ$360,000 in November.

However, despite the monthly fall, mortgage debt was up NZ$3 billion, or 1.8%, year-on-year in December from NZ167.9 billion in November 2009.

Consumer credit did, however, record a NZ$76 million month-on-month increase rising to NZ$11.99 billion from NZ$11.92 billion in November. Over the year it fell by NZ$78 million, or 0.7%, from NZ$12 billion in December 2009.

Business credit, which the Reserve Bank said in last November's Financial Stability Report that it wanted to see modestly grow to help sustain an economic recovery, rose by NZ$1 billion to NZ$73.04 billion in December from NZ$72.03 billion in November. Year-on-year business credit was down NZ$1.4 billion, or 2%, from NZ$74.4 billion.

Meanwhile, agriculture sector debt fell by NZ$220 million month-on-month to NZ$47.81 billion in December from NZ$48.03 billion in November. Year-on-year it rose NZ$692 million, or 1.5%, from NZ$47.1 billion.


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If this paying back of debt continues what will happen as people attempt to pay back debt with money that doesn't exist?

If this becomes a long term trend will the government become worried about the health of our financial system and what reaction might they take?


This is the really interesting bit, "Consumer credit did, however, record a NZ$76 million month-on-month increase". It may signify that home owners, locked out of tapping the mortgage 'to live', are having to use the expensive credit card etc. It won't be long till that comes to an end.... 

especially with retail sales being widely reported as weak.

hamrod, they will start to borrow to feed into the system, Id say starting with 200 million a week and moving up past 300 million a week.

by they do you mean the government?

All can see and smell the approaching rate rises...the UK and EU will kick them off...Bollard will have to raise the ocr...he's already behind the curve. By early 012 the impact of the rises will slam into any sniff of growth above zero...the RWC will be history by then. English will have been told by S&P to pull finger or else. The state sector will feel the ghost of Ruth in all the lower ranks cos they are always the ones what get the bums rush and the Sir Humphreys will get a bonus for doing the 'spring cleaning'. Oh and the mps will get a fat rise too.

Been overseas for a couple of weeks, possibly I have missed it however I would like to see robust evidence that people in aggregate are saving not lacking in disposable income.

Any suggestions??