The average amount first home buyers are paying for a home declined slightly last month as did the average size of the mortgages they took out to buy their home.
Interest.co.nz estimates that the average purchase price paid by first home buyers in May this year was $673,000, down slightly form $680,000 in April.
May's estimated purchase price of $673,000 was approximately midway between the REINZ's lower quartile selling price of $580,000 in May and the median price of $763,000.
However their estimated average purchase price has bounced around within a few thousand dollars either side of that price since October last year, so the overall trend for the amount they are paying is flat.
May's average purchase price remains $45,000 lower (-6.3%) compared to the estimated peak of $718,000 set in April 2022.
While the prices they are paying for homes appears stable for now, the numbers taking out low equity loans with less than a 20% deposit continue to grow.
The latest Reserve Bank figures show that 2895 mortgages were approved to first home buyers in May, and of those 1213 (41.9%) were low equity loans.
That set a new record for low equity lending to first home buyers.
It was both the highest percentage of low equity borrowing by first home buyers in the Reserve Bank's data series which goes back to August 2014 and the highest total number of low equity loans made to first home buyers in the same data series.
The average amount borrowed by first home buyers taking out a low equity loan in May was $629,000, although that was down by $56,000 (-8.2%) from the peak of $685,000 set in May 2022.
The Reserve Bank figures also show that in total, 2895 mortgages were approved to first home buyers in May, equivalent to exactly one third of all new mortgages approved by banks for the purpose of purchasing a property in the same month, suggesting first first home buyers have a substantial share of the housing market.
3 Comments
The average amount borrowed by first home buyers taking out a low equity loan in May was $629,000
That's cool they are on the ladder, next rung up on the ladder add 250k, The average age of first-home buyers in New Zealand is currently around 36 years old. They have 29 years till retirement so $629,000 plus lets say another $250,000 to buy a second home = $879k
Interest rate 4.95% p.a.
Loan term 29 years, 11 months
Interest paid over term $807,713
$1080 per week for the rest of you working life................................
https://youtu.be/RRh0QiXyZSk - Sixteen Tons
Another day older and deeper in debt....
or if you prefer the song that is banned in China
https://youtu.be/1q82twrdr0U Les Misérables | Do You Hear the People Sing?
Do you hear the people Sing
Singing the song of Angry Men
It is the music of the People
Who will not be slaves again.
About $500/w on interest alone...
I can see some people thinking that's worthwhile - not me though. Rent is currently much cheaper than mortgage interest and that's before you take into account insurance, rates, maintenance and the opportunity cost of not investing your deposit elsewhere.
But surely it must be considered at a higher level that the drag on the economy of 25-30% of everyone ones productive time is devoted to the dead end of interest payment. Makes central government taxes look positive value.
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