First-home buyers (FHB) are continuing to stretch themselves to get into the property market.
A record portion - 19% - of new residential mortgage lending went to FHBs in January, according to new Reserve Bank (RBNZ) figures.
FHBs have been taking an increasingly large share of the pie since the RBNZ’s data series started in 2014, when around 10% of new mortgage lending went to FHBs.
At $889 million, the amount borrowed by FHBs was up 27% from January 2019.
This was a much bigger jump compared to the increase in total mortgage lending across all borrower types, which was up 16% to $4.71 billion.
While lower than the months preceding, this $4.71 billion was the highest for January (since at least 2014).
FHBs continued to stretch themselves, with 40% of new mortgage lending to FHBs going to those with deposits of less than 20%. Pre-2019, this figure was in the late 20%s and 30%s.
Of all the lending to borrowers with deposits of less than 20%, a record-high 71% went to FHBs.
Investors borrow 31% more than a year ago
As for investors, they accounted for a fifth of new mortgage lending - the highest portion since September 2018.
Investors borrowed a whopping 31% more in January 2020 ($951 million) than they did in January 2019.
Of all lending to investors, 15% went to borrowers with deposits of less than 30%.
This was broadly on par with much of 2019 and 2018 and a huge fall from before October 2016 when the RBNZ tightened loan-to-value ratio (LVR) rules, further restricting bank lending to borrowers with small deposits - particularly investors.
Owner-occupiers steady as she goes
With investors and FHBs borrowing proportionately more, owner-occupiers took a back seat.
They made up 60% of new mortgage lending ($2.81 billion) - the lowest portion since July 2018.
However lending to owner-occupiers was still up 9% compared to January 2019.
Only 5% of lending to owner-occupiers went to those with deposits of less than 20% - a similar portion to that of recent years.
No major shifts in high LVR lending
All eyes will now be on whether the RBNZ will change LVR restrictions when it releases its next biannual Financial Stability Report on May 27.
Across all borrower types, the portion of lending to those with deposits of less than 20% sat at nearly 11% of all borrowing. Given this is where it has been sitting since LVR restrictions were loosened in January 2019, the RBNZ might not have reason to change its settings.
The current rules mean at least 80% of owner-occupier lending must be to those with deposits of at least 20%. Meanwhile at least 95% of investor lending must be to those with deposits of at least 30%.
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