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The past year finished with the fourth consecutive monthly record high of mortgage lending, while despite the 'lost' month of April, some $8 billion more was borrowed in 2020 than the year before

The past year finished with the fourth consecutive monthly record high of mortgage lending, while despite the 'lost' month of April, some $8 billion more was borrowed in 2020 than the year before

The 2020 year ended in a blaze of activity in the mortgage market, with the fourth consecutive month of record lending as the monthly amount advanced approached the $10 billion mark.

Figures released by the Reserve Bank (late because of the data breach problems) show that banks advanced $9.652 billion for mortgages in December. This beat the record $9.289 billion in November 2020, which beat the record $7.782 billion in October, which beat the record month of $7.323 billion in September.

Before this quartet of record months the previous high water mark was in May 2016, at a little under $7.3 billion.

In the full 2020 year, Kiwis borrowed $76.322 billion in new mortgages, which, remarkably beat the amount borrowed in 2019 by over $8 billion (when $68.205 billion was borrowed).

It's remarkable because in April we were all locked up, with just $2.749 billion borrowed - down from some $5.452 billion in April 2019.

In fact the April and May months this year (May also being affected by Covid) were almost $5 billion down on the two months combined a year earlier.

But boy, did we play catch up.

In the first six months of 2020, mortgage borrowing totalled $28.905 billion, down from $31.981 billion in the first six months of 2019.

In the last six months of 2020, we borrowed $47.417 billion, up from just $36.224 billion in the last six months of 2019.

In fact if we average the last six months of 2020, it gives us a figure of about $7.9 billion a month - which is higher than the previous record single month for lending.

In the final three months of 2020, some $26.723 billion was borrowed, which compared with just $19.412 billion for the last three months of 2019.

So, those last three hectic months in 2020 accounted for nearly all the $8 billion difference between the total amounts advanced in 2019 and 2020.

When the LVRs were removed

Much has been said about the impact of the RBNZ's decision to remove, effective from May 1, 2020, the restrictions on high loan to value ratio (LVR) lending. 

As far as investors go, this certainly did seem to light the fuse.

Previously investors needed a 30% deposit, but that was dropped after May 1 and the banks were quick to take advantage, basically shifting their criteria for lenders to the 'normal' high LVR definition of any loan on a deposit of up to 20%.

In the first six months of 2020 investors borrowed just $910 million on deposits smaller than 30%.

In the last six months of 2020 investors borrowed $3.959 billion on deposits smaller than 30%.

So, the high LVR lending to investors was some $3 billion higher in the second half of the year than in the first half.

And this had a big impact on the overall figures.

In December investors in total borrowed $2.454 billion - which was the highest monthly amount borrowed by this grouping since May 2016, and was the second highest total ever.

The return of the LVRs

Interestingly the high LVR borrowing for investors did dip slightly from $844 million in November to $822 million in December.

On November 11 the RBNZ announced intention to reintroduce LVRs from March but, significantly, a number of banks moved early to reinstate 30% deposit limits on investors. Presumably that's why there was the slight fall in high LVR lending to this grouping in December.

In terms of the overall share of the mortgage market, the amount borrowed by investors in December represented 25.4% of the total. That's below the highs of the mid 30s percentages that grouping was seeing in 2016 before the RBNZ first clamped tough deposit rules on them, but it is the highest percentage level since 2017, and much higher than the levels this grouping was borrowing prior to the LVRs being dropped. In December 2019 investors accounted for just under 20% of total borrowing.

So, what of the first home buyers (FHBs)?

Well, they borrowed another record amount in December, of $1.686 billion, up from the previous record high of $1.605 billion in, well, November.

But the investors have been squeezing them and their share has been dropping - although in December it blipped up a little for the first time in a while to 17.5% from a 17.2% share in November.

However, prior to that the FHBs share of the monthly spoils had been dropping, and appreciably so.

In July 2020 the FHB grouping borrowed $1.344 billion, which was a record high 20.4% of the total amount advanced by the banks that month.

FHBs fall

Since that high water mark, however, while the monthly FHB borrowing figures have continued at high levels, the overall share of the total amount borrowed has been falling, to 19.8%, in August, 19% in September, 17.9% in October and 17.2% in November. Then it picked up in December. Was that by any chance linked to the signalled changes by the RBNZ and reintroduction of LVRs? As stated above the banks did in December start to clamp down on investor lending.

Oh, and just as a final note to those who draw attention to the fact that mortgage sizes have been getting bigger and hence so that amounts borrowed in total have been getting bigger too, a quick crunch of the numbers of individual mortgages advanced in December shows that there was a record number, 3338 mortgages, advanced to FHBs. As for investors, there were 4995 mortgages advanced, which is the highest number since August 2016, but well below the 6926 in the monster month of May 2016.

And in terms of total mortgages advanced, in December that was 28,604, which was the highest number since November 2016, but again well down on that monster May 2016 month, in which there were 35,112 mortgages advanced.

And the average mortgage size? In December it worked out at a little under $337,500, while in May 2016 (when just under $7.3 billion was borrowed) it was $207,500.

So, in four and a half years the average new mortgage size increased 62.7%.

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Quick update on what is going on in Auckland re listings, which in January, according to BT were hitting highs
Well, today at 11am, on RE NZ, there had been precisely 69 new listings. By contrast, in 5th November (peak) it was 256 at the same time of day. It v much looks like the listings are drying up. meanwhile January sales in Auckland fell 45% cf December when norm is 27%

Listings are decreasing so presumably competition will increase and therefore price will go up?

What's caused the sharp decrease in listings?

Just like Wellington

How does it compare to same time from previous years?

Not apples for apples comparison. Most houses are listed mid week (Wed or thurs). You are comparing a Monday with a Thurs, not withstanding different months (although Nov and late Feb are relatively similar seasonality wise (both peak)).

Unsurprising, by mid-2020 it was clear to anyone that Govt and RBNZ would do anything to support the property market through the pandemic as it's too big to fail.


....meanwhile outside the "world" of Kiwi property investors, all western FIAT currencies, especially the US dollar are rapidly being inflated away to toilet paper, by stimulus packages etc, which despite all the "rhetoric" will have to be paid back by ....yes you guessed it, the tax payer, even many businesses, who are now facing increasing prices from all angles, while wages & salaries can't keep up. So household incomes are not only shot through higher rents or mortgage P&I or but living costs as well !

Yes, and how long can this keep up ???

Plus despite your local real estate's agent assurance that interest rates will never rise ??? they ever look at bond prices ? .....highly unlikely.

What a "cluster****" this is all going to turn into......

Exactly right. Is anybody looking at what is happening to bond prices, locally and internationally ? Certainly not the NZ Ponzi real estate speculators.... they might be in for a very rude awakening.

I think you will find that most countries that ruin their currency, do a currency reset (issue new currency), blame the previous govt for the necessity of a reset, then its business as usual. Nothing gets paid back. The debts of a worthless fiat currency are themselves worthless.

Yes, but the key extra step in the middle is deleveraging (going broke) when confidence in the currency fails.

"meanwhile outside the "world" of Kiwi property investors, all western FIAT currencies, especially the US dollar are rapidly being inflated away to toilet paper"

Which is exactly why anyone with any capital is emptying their bank account into houses. If you have tidy 1.5mil in the bank a nice 2brm unit in Remuera you can rent for $700 is beckoning

Chinaman1.....sounds to me like you have one of those tidy units on your books for sale ? .....anyway on a 40% deposit for your delightful unit, you would have $600,000 "opportunity lost" that could of gone into Bitcoin .....Then with your mortgage of $900,000, even with your "special" rate of 1.99% over 30 years you have a monthly payment of $3,302 and as I mentioned, how long will interest rates be this low with bond interest rates increasing ??? .....while your rent pa (less 2 weeks vacant for tidy up etc) is $2,916 a month, so you have to come up with $385 per month (difference between mortgage repayments and rent) plus rates, insurances & repairs etc the only way you are going to make any money is capital gain, which means prices are going to be so "out of touch" with the market, so good luck with that :)

Getting 12.5% to 15% gross returns on my properties in the USA - plus over 5 -7 years of holding these properties, achieved 85% capital growth - I wouldn't touch Auckland property at these prices with a barge pole !

Sigh. 12.5 - 15% on your USA properties?!?

- Crazy Horse, giving to the Americans since 1850

yep Chinaman1 ....don't let the facts get in the way of your good story ..those numbers speak volumes ....and find me a residential property in Auckland, that would even give me even an 8% gross return ?


The bigger the bubble the bigger the pop. Last 30yrs we'd just lower interest rates when property market was threatened. With OCR at 0.25% that rope is nearing it's end. Hmmmmm


No bail-outs! If push comes to shove then the banks who were booking huge profits, and the buyers who dove in head-first pursuing massive capital gains - they deserve nothing from the taxpayer. I am in deadly fear that the taxpayer is going to be on the hook when this all pops and we need a new political movement to ensure it doesn't happen.

Whats the alternative (other than a tax payer bail out if it goes pop)?

Are you suggesting that a few hundred thousand kiwis get put out on the street so their houses can be snapped up by rich chinese?

Are you then suggesting that the just over half population should prop up the equity of the other half plus the lenders due to xenophobia? ( Just make citizens only, cut immigration)

Ahhhh isn't that how bail outs usually work? The many suffering for the few

Yeah nah. An orderly decline is best. Even a housing market stagnant long enough for wages/salaries to catch up. Let the air out slowly = no pop.

Why would wages/salaries go up? They haven't much for years. And unions are near-dead.

Not sure you can completely ensure 'no pop'. If governments and central banks had total control then the sharemarket would never crash and the US housing market would never have crashed. The belief that the PTB are omnipotent is an illusion: they can certainly create a bubble, but can they prevent a crash? History tells us they can't.


If you can't pay your mortgage then it won't be your house, it will end up being the banks. And this is right & just. It can't be that people just get onboard for endless capital gains, yet don't assume any downside risk. Why is ok for some people to live in cars and in crummy motels, but a person who can't pay their mortgage must be bailed out by the taxpayer & gets to keep 'their' house, as heaven forbid someone who took a risk should ever end up having to accept the consequences. We need to stop this mentality in its tracks right now - the belief that certain people are entitled to be wealthy no matter what. Your claim about 'wealthy chinese' likely being the only beneficiaries in such a circumstance is also a baffling and xenophobic red herring.

A couple of things Tom,

1. If you think this gov (or national) are going to let huge amounts of kiwis lose their homes to banks then you are just being naïve, that wont be good for anyone.

2. People who live in their cars and crummy hotels either made bad life choices or have some sort of mental illness in most circumstances.

3. Are you for real on the xenophobe comment? Stop being so PC and tell us what you really think.

If you are an investor who paid too much for their asset and you get wiped out, you also made a 'bad life choice'. Sorry mate, you are obviously of the belief that bail-outs are a good thing & that some people are entitled to be wealthy, come hell or high water. We have a difference of opinion on that.

#2: welfare for the rich is justified because we are good; welfare for the poor is undesirable because they are bad.

It takes some true gymnastic thinking to get to such an entitlement mentality.

I would actually prefer that to bailing them out, in a weird kind of way.

Im guessing owner occupiers will receive some sort of support for underwater mortgages but I cant see investors being bailed when the time comes.

that might be fair but if investors take a big hit it will hurt the whole country, regions will suffer the most.

Like the good doctor said "It's going to get worse before it gets better"


We have a central bank and goverment who dramatically increased their interventionism when it was thought that house prices could decline by a paltry 10%. In doing so they have thrown their full weight in behind property investors and owners, and have cost FHB's billions of dollars. They have also cost renters billions of dollars. This should offend the sense of fairness and decency of every reasonable person. We have no right to call this a housing 'market' when it is not allowed to function as a market. We have no right to speak of 'risk' when owners and investors are assuming no risk at all: the total risk is being shouldered by taxpayers. This is a very sick situation where the government and central bank are ensuring the wealthy become wealthy at no risk, and devil take the hindmost (renters, FHB's, the young, and future generations of taxpayers). I really despair over the situation and am sickened by the prospect of future bail-outs which will be inherently grossly unfair in a world where you are supposed to enter into financial decisions as an adult and with both eyes open.

'Devil Take the Hindmost' by Edward Chancellor is a great book. I enjoyed it thoroughly and think many kiwis would benefit greatly from reading it.

could be an opportunity for transformation in the form of a nationalised bank

Government intervention in the banking system sounds like a winner to me

There is already a nationalised bank - Kiwibank...

Tom.... enjoying your posts, accurate and funny.

Looks like good debt to me- a sign that the NZ economy is raging on.