June was a pretty grim month in New Zealand as we are finding out.
Now in company with various dire high frequency data that shows various business figures diving in June we can add in a slump in the number of new mortgages.
The 14,590 new mortgages in June 2024 was the smallest total for a June month since the Reserve Bank (RBNZ) started issuing the current monthly mortgage data series in 2015. The RBNZ has issued this summary of the latest figures.
The RBNZ data shows that the new mortgage number was down some 6.2% on the 15,498 mortgages in June 2023. And it's certainly salient to point out that the housing/mortgage market was far from flying last year.
If we go back to June 2021 when the housing market was still amid the pandemic frenzy the number of new mortgages was a whopping 26,048, while the highest number of mortgages recorded for a June since the data series started was a massive 33,157 mortgages in June 2016, some 127% more than total in June 2024.
The fact that house prices have risen so much and therefore so have mortgage sizes, over the years, means that the figures for amounts of mortgage money advanced tend to somewhat belie the ups and downs in activity.
However, even looking at the amounts doesn't put June 2024 in a great light.
The $5.617 billion worth of mortgages signed up for last month was down on the $5.686 billion in June 2023 and is the lowest total for a June month since 2020, at which point we were just emerging for the first big pandemic lockdown. In June 2021 at the pandemic peak the mortgage total was $8.526 billion.
Looking at the breakdown of the various groups last month, we can see that the first home buyers (FHBs) took $1.212 billion of mortgages, which made up 21.6% of the total.
It's been a consistent theme of the downturn in the housing market that the FHBs have remained active and have been taking historically high shares of the mortgage money.
The 21.6% taken by the FHBs in June 2024 was slightly higher than the 21.4% in May.
However, since peaking at an all-time high of 25.2% share in December 2023, the FHB grouping is now giving the appearance of perhaps having reached its limits.
But talking of limits, if we go back to the 2016 period, the sky was the limit for investors, grabbing shares of the mortgage money of in and around 35%.
Since those times though, things have fallen off the cliff and the investors have looked to be firmly on the sidelines during the downturn.
There's been a lot of interest this year in whether the start of the progressive reintroduction by this Coalition Government of interest deductibility for investors was going to make a difference.
And for a while it looked as though it might be.
In April the investor grouping took 20.1% of the overall mortgage monies advanced, which was this grouping's highest share in three years.
However, in May the percentage share fell to 18.9% and for June, the total taken by the investors, $1.047 billion, was 18.6%. So, the 'rally' is looking a bit short-lived, although the percentage share is up compared with just 16.5% taken by the investors in June 2023.
But there's no doubt it's pretty quiet out there. It may be time for the banks to drop their rates to drum up some new business. Oh, hang on...
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