New Zealanders owed a record $397.5 billion on their residential mortgages at the end of the June quarter of this year, up $21.6b (6%) compared to the same time last year, according to the latest Reserve Bank figures.
A total of $27.3b of new residential mortgage lending was advanced in the June quarter (Q2), up 1.5% compared to Q2 last year.
Interest on the debt weighed in at $4.8b in Q2 this year, down 12% from $5.4b in Q2 last year. The drop came even though mortgage interest rates have been increasing since the end of last year, with the average two year fixed rate increasing from its recent low point of 4.49% in November last year to 5.26% in June this year. That suggests many people with mortgages are still on lower fixed rates and are yet to feel the effects of rising interest rates.
The total value of mortgages repaid in full was $15.2b in Q2, up 2% compared to Q2 last year.
Borrowers made a total of $7.3b in scheduled mortgage payments in Q2, and another $4.8b in additional payments over and above the minimum required.
That suggests many people are making significant extra payments to pay down their mortgage as quickly as possible.
The figures also show that there has been a substantial increase in low equity lending, where the amount borrowed is more than 80% a property's value.
In Q2 last year, the total value of low equity mortgages was $31.9b. By Q2 this year that had increased 25% to $39.8b.
Over the same period the total value of standard mortgages, where the amount borrowed is no more than 80% of a property's value, had increased by just 4%.
Low equity lending is particularly common for first home buyers.
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