Latest quarterly Reserve Bank figures show that the country's new mortgage borrowers are stretching themselves much less than has been seen in recent years in regards to the amount of debt they are taking on relative to income

Still a 1/3 are over 1:5 DTI. Better but still a quantum leap away from meeting the needs of the population without funding bank dividends.

Double-edged sword. The incomes of those who took the extra debt burden on is increasing as they move through the workforce, so theirs drops. And new entrants are buying cheaper. That doesn't do much for the servicing cost of the debt, which naturally still has to be repaid one way or the other. And if you can't do it when you sell, then you need to find that difference in your existing income/savings to make that next move work.

Great news. A bit further and they can slam in a DTI cap. I’d say a sensible number of 6 will have the desired result. That will prevent the crazy up and down swings. Happy days 

Are the numbers from September 2021 available? When the temporary LVR restrictions were tightened for first home buyers the proportion of borrowers with a High DTI was cited as one of the key considerations by RBNZ

Sales are also down.  So all you can conclude is that hardly anyone is qualifying for a mortgage these days.  If we want a world where only the really rich can buy houses, then we are probably going the right way about it.  Lets stop all lower and middle income people from buying houses, then the Reserve Bank figures will look even better!  I'm sure in a year or two people will start claiming that housing is now "classist" or "racist" and the Govt will decide to hand out free money to the supposedly poor in order for them to not have to borrow as much.  Thus the seeds of the next housing boom-bust will be sown.

If banks have a lot of people with large DTI once house prices start falling at the pace it is, many defaults will start to occur. Back in the day I remember DTI was 3 x income and when rate’s went high people were still defaulting some were just giving keys back to mortgage company in uk.

DTI is just one metric.

The DTI on new mortgages will always drop as mortgage interest rates increase.

The ratio of weekly mortgage servicing costs relative to post-tax  weekly income  is a much more insightful metric of consumer financial stress. 

Other useful metrics relate to the  level of payment deficits and the level of voluntary repayments of mortgge capital.

KeithW

There are so many folks that currently hate waking up,  because they end up reading articles about House price fall

Cue the RBNZ deciding not to impose DTI limits because 'things have settled down'. Wise fools if they do.

I keep thinking how will this all end .....if houses go down and rental demand is still there , then "capital laden" investors will scoop in and grab these properties ...fortunately to make property work WITHOUT capital gains, you have to have at least an 8% gross return..and even then, you may not cover you costs ??? 

Please can someone show me an existing property in Auckland, bought in 2021 that would give you an 8% or more gross return .....excluding new developments.

But the good thing for FHB's, is that each dollar you are saving now, will be worth 2 in the long run, as with prices falling you are getting that much closer to your required deposit....and less money to borrow, even at a higher rate of interest. 

The boomer "ma n' pa" investors have had their fun ...time for a balance....capital gains tax on the sale of every second or subsequent property - no exceptions ....no matter how long you have held it for. 

And here's the kicker - scrap any "capital loss on sale" tax deductions.   

As the Hosk says "Happy Daze" :) 

DTI would stop speculators using debt to avoid tax and exploiting renters need for shelter. Orr has this option now for about a year but continues to stall using it.

Some big changes reported here. And as posted above, it would be good to have the Dec quarter 2021 data for comparison as well. Things look like they are settling down - on paper anyway. I feel for the bottom enders, especially the older ones. If you're young you can take a risk as you've got 30-40 years to work with - in theory. 

With things (in theory) also starting to settle down offshore as well, we may be near the bottom of the cycle later on this year (Sept quarter?)  which pretty much takes us back to the beginning of covid. Once again, I think this is good sign.

As multiple property owners & boomers we're down almost a million from peak (on paper) but that's a price worth paying for the future of home ownership & economic stability.

Reading the comments above, its pretty obvious we just cant carry on thinking and acting like we currently do about housing. A roof over your head is a necessity, spending your life paying for a box on a postage stamp is not the path least trodden.

Let go of housing is the only road to riches

Let go of your self image being a result of the house(s) you own.

Accept that we all cant be rich, you are average, embrace your averageness.

Financial yoga is a thing, you can do it.

I do mean what i said in the first bit, attitudes towards housing have to change, if we keep doing what we have been doing we cant expect different results. Needs to be a hard road travelled, lots of screaming from vested interests, generation or two down the line normality will prevail. Housing needs to be an unattractive investment.

The RBNZ keeps an eye on DTI over 5, yet they kept the FLP alive and kicking for 8-12months longer than necessary which encouraged banks to lend as much as they could due to sheer financial incentive. RBNZ credability is low already, will they make the big hikes we need

DTI is a nonsensical ratio, ETI (expenses) is what matters and this has probably remained about steady. Marvelling at DTI's dropping when interest rates are rising is like marvelling that snow is melting in the sun.

Run the DTIs at what they would be in a more functional (ie less dysfunctional) housing market with say median income multiples of 4, 5 or 6.

It seems to come as a surprise to many that the debt you have is greatly influenced by the price you have to pay for the house.

Much of the debt people are now paying for, would not exist if we had better land-use policies.

Restrained DTIs can be expected to remove one driver of overinflated housing values...will they solve all housing issues no, but taking steps to hinder a speculative bubble can only be considered a positive.

They would also reduce defaults should mortgage holders find themselves in circumstances such as the current.