By David Hargreaves
While many around them are losing the inclination, or perhaps ability, to borrow money for house purchases, the first home buyers are staying strong in the market.
In percentage terms the first home buyers last month took their biggest share of the mortgage money advanced on a monthly basis since the RBNZ started publishing the mortgage figures by borrower type in 2014.
The latest Reserve Bank figures highlighting mortgage figures for October show that in total (all borrower types) just $4.605 billion was advanced for mortgages in the month, down from $5.36 billion in the same month a year ago and $5.853 billion in October 2015.
September's figures were also extremely subdued.
Clearly the election and uncertainty around its outcome has had a significant impact on house market activity this year.
In that regard it is worth reiterating that the election was on September 23, while the outome of it - namely that there would be a Labour-led coalition - was not revealed till October 19. Therefore the pre-election uncertainty would have carried through into October.
But while the overall amount borrowed in October remained pretty much flat on that for September (when $4.567 billion was borrowed), the amount advanced for first home buyers rose month-on-month by $64 million to $722 million.
In percentage terms that $722 million made up 15.7% of the total advanced - which is comfortably the highest percentage of a monthly total taken by the FHBs since the RBNZ started releasing these figures in August 2014.
Prior to particularly the introduction of the 40% deposit limit for housing investors last year, the FHBS regularly picked up only around 9-10% of the total.
Yes, the total figures have dropped by a lot since then, but the amounts borrowed by FHBs have stayed fairly consistent.
The $722 million borrowed by FHBs in October compared with $772 million for this group last October and $672 million in October 2015.
These figures continue to go against the arguments of many in the real estate industry that the RBNZ's loan to value restrictions should be lifted specifically for the FHBs. The figures would certainly suggest that since imposition of the tough deposit rules on housing investors last year the FHBs have had a better 'fighting chance' in the market.
Prior to the election both the National and Labour parties indicated they would like to see the LVRs gone totally.
When introducing them initially in 2013 the RBNZ signalled that they would be temporary. They've now been temporary for just over four years.
RBNZ comments on LVRs awaited
The RBNZ is releasing its latest Financial Stability Report on Wednesday (29th) at which it is promising to say more on the subject of LVRs.
Acting Governor Grant Spencer said earlier this month, after the release of the RBNZ's latest Monetary Policy Statement, that "we are certainly reviewing the [LVR] restrictions and the criteria that we would adopt for their removal".
"We'll be saying more about that at our Financial Stability Review...We'll talk a little bit more about the LVRs and those criteria at that point."
The key question will be whether the RBNZ does announce some specific intention to begin removing the restrictions (it has said it would not remove them all in one go) or merely - as most bank economists seem to expect - gives a general indication of the conditions and circumstances under which a controlled removal may commence, possibly next year.
In the meantime the latest monthly borrowing figures show that borrowing by investors remains subdued. The amount borrowed by this group in the month was $1.05 billion, just up from $1.048 billion in September, but down on the $1.265 billion borrowed in October lat year and very well down on the $1.717 billion borrowed by this group in October 2015.
The percentages of the total borrowed on a monthly basis by housing investors have settled at around 22-23% compared with about 35% before the 40% loan limits were announced in July last year.
An interesting move in recent months has come among owner-occupiers. This grouping had remained at reasonably steady, if somewhat lower levels, since the last round of LVR restrictions were announced.
However, in the past couple of months and in and around the election this grouping has fallen away.
In October $2.789 billion was advanced for acquistion of owner-occupied housing, which was down from $2.809 billion in September and some $479 millon - or 14.7% - down on the $3.268 billion borrowed in October 2016.
Taken at face value this would suggest the owner-occupiers are taking a 'wait and see' and 'sit tight' approach at the moment.