Days to the General Election: 23
See Party Policies here. Party Lists here.

Monthly mortgage borrowing more than halved in April compared with the previous month, according to new Reserve Bank figures

Monthly mortgage borrowing more than halved in April compared with the previous month, according to new Reserve Bank figures

The deep freeze put on the housing market by the lockdown is shown clearly in the latest Reserve Bank residential mortgage lending by borrower type figures.

After a boom March month, in which mortgage money advanced hit its highest level for a March since 2016, everything ground to a near-halt in April.

Total monthly new mortgage commitments were $2.7 billion in April, which was a decrease of some  $3.4 billion, or 55.5%, compared with March 2020.

Compared with April 2019 the figures for last month were down by 49.6%.

In Auckland, new mortgage commitments in April 2020 fell 42.6% compared with a year ago, while new commitments outside of Auckland fell 54.8%.

New mortgage commitments to first home buyers decreased from $1.1 billion in March to $0.5 billion in April.

First home buyers accounted for 17.6% of new mortgage commitments, down from 18.4% in March.

Compared with April 2019 figures for first home buyers were down 49.8%.

Investors accounted for 20.4% of new mortgage commitments in April, down from 21.3% in March.

The latest figures outlining how much of the banks' money was advanced in high LVR loans were also released on Wednesday and are worth noting for future reference.

That's because the Reserve Bank removed mortgage loan-to-value ratio (LVR) restrictions effective from May 1. The LVRs have been removed for at  least the next 12 months.

So, the figures for April provide the last full month of life under the LVR regime.

And the figures show that the banks have continued to lend very much under what their limits have been.

In April, 11.6% of new mortgage commitments without investment property collateral had an LVR share of over 80% after exemptions, compared with the speed limit of 20%. For investors, 0.3% of new commitments had an LVR of over 70% after exemptions, compared with the speed limit of 5%.  

The figures for May will therefore be most interesting as the housing market tries to restart again.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

14 Comments

Less borrowing for houses - the people rejoice!

Won't be much fun for highly leveraged buyers, who entered the market in the past 12-24 month period. I do pity the first home buyers, who have only known the good times, and got sold the dream.

This is a sure sign the banksters are aware the full force of this economic storm has yet to hit, with new borrowings limited to those with high equity positions.

After the election is when the true effects of over leveraged society will come to bare, as the government can not keep the bubble inflated forever.

Hopefully FHB can just keep their payments going and they'll be fine over the decades. But lower house prices would be far better for far more NZers.

So it depends whether we should only care about older portfolio holding investors or more NZers of more generations, as used to be the case in NZ and as helped them afford their own first houses when they were younger.

The post-elections, post-subsidies months' stats will be even more interesting.

Should get a boost soon.
https://www.stuff.co.nz/life-style/homed/real-estate/121612370/landmark-...
$700k for 3 containers stacked up against a rock. Bargain.

Context...
For the past six years, the house has been an Airbnb rental, so many thousands of Kiwis and overseas visitors already know it well.

This landmark container house in Owhiro Bay, Wellington was built in stages, as one container was stacked on top of another.

Oh, wow, you don't say..........?

Next to motorway walking up and down those stairs all day. This drop couldn't come any sooner.

Good name TTP. Must be a Brit.

In lockdown if the mortage was still 45% or 55% it is not bad. Infact good under the situation.

Important to ses the data in August / September.

Wait and Watch.

would get cold in the winter and hot in the summer with no insulation just steel, would have thought they would have lined it

Read somewhere they were freezer containers so already insulated.

So, bank created debt (mortgages) halved in April.
That is a lot of money supply not maintained.
This is key to prices.
Ok, so people with houses over $1m in Auckland may not sell because prices are falling for next 20 months.
But lower down will have to, due to unemployment. Hence mix changes in opposite way to last 4 months pre CV19, leading to dropping median instead or it rising.

Moving from 10 years of creating money, to reducing rate of money supply growth.
A la Steve Keen, inevitable consequence of this is falling prices

Days to the General Election: 23
See Party Policies here. Party Lists here.