1st home buyers account for 10% of new mortgage lending

Property

First home buyers account for 10% of new mortgage lending while investors account for less than 30%, according to new Reserve Bank figures

11th Nov 14, 4:44pm by Greg Ninness

<a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

First home buyers are accounting for just under 10% on new mortgage lending while investors account for just under 30%, according to new figures released by the Reserve Bank.

The Reserve Bank has started collecting information from banks about the types of customers taking out mortgages, as well as how much they are borrowing.

They are being classified either as first home buyers, other owner-occupiers, investors, or people borrowing for business purposes.

It has just just released the figures for new borrowing in August and September.

The September figures show that of the $4.264 billion in new mortgage lending advanced by the banks during the month, $430 million (10.1%) was to first home buyers, $2.541 billion (59.6%) was to other owner-occupiers, $1.226 billion (28.7%) was to investors, and just $67 million (1.6%) was for business purposes.

In August first home buyers accounted for 9.7% of new lending, other owner-occupiers 59.7%, investors 29% and business borrowers 1.5%.

The figures also show that first home buyers accounted for a third of new mortgage lending that was above the Reserve Banks 80% loan-to-valuation ratio (LVR) threshold, while investors accounted for 10.6% of these loans and owner-occupiers accounted for just over 55%.

Business borrowers accounted for less than 1% of high LVR lending.

New mortgages that were under the 80% LVR limit accounted for almost 92% of total lending, with first home buyers taking 8% of those loans, investors 30.4%, other owner-occupiers 60% and business borrowers 1.6%.

New mortgage lending includes new loans being taken out to purchase a property, top ups on existing loans, and existing loans being switched between banks.

The Reserve Bank intends to publish the data monthly from now on.

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13 Comments

by DFTBA | 11th Nov 14, 5:40pm 1415680825

So, 60% is going to owner-occupiers? Would be nic to see a break down of what they're borrowing for.

Refurbishments? Holidays? Certainly not downgrading - not on those numbers.

Upgrading? In this market?

hmmm......

by TimfromTaupo | 11th Nov 14, 5:44pm 1415681071

I thought TV3 had statistics the other night, 10% foreign purchases, 17% first home buyers, 44% people that already own a house and I can't remember the rest... Maybe someone can find the numbers for us...

by steven | 12th Nov 14, 7:29am 1415730577

In effect though the investor is buying based on the FHB's emotions. ie the investor expects that house prices will be driven up by others.

Given that the returns are so low it seems for rentals, it has to be tax rebates and/or capital gains the investor is gambling on.

regards

by Your Landlord | 12th Nov 14, 9:19am 1415737141

Investors are not gambling steven. They make sound decisions based on good long-term fundamentals. The returns prove it.

by Crazy Horse | 12th Nov 14, 10:19am 1415740786

Good Morning Your Landlord ....a very quick question....what percentage do you consider as a "sound" gross rental return for a standalone house or townhouse/unit (not apartments) in Auckland ?

by Your Landlord | 12th Nov 14, 11:50pm 1415789418

Good evening Crazy Horse. Still battling away against property investing I see :)

I own properties that are yielding between 20 and 25% returns. Good enough for me.

Of course I did buy them some years ago.

by Crazy Horse | 13th Nov 14, 7:57am 1415818643

Thank you for your reply YL.

My question was, for the current Auckland market, if you were to purchase now, what would be your bottom line of the gross % return from rental income, based on the full purchase price ?

An example ..... 3 bdm house purchased for $650,000 returning in rent $25,000 pa is 3.84%

by Your Landlord | 13th Nov 14, 9:11am 1415823111

And my answer is that I buy a property to keep. The initial yield is just that... the initial yield. In 5 years, 10 years, 20 years... it is different.

I am almost unconcerned about the initial yield when I buy. Of more concern to me, for example, is if the property is suitable to lease and in a suitable area. There are other things I look for of course, and, if all is OK, I buy. I think to myself "so what if it yields 5% or 5.5% at the moment. One day it will be a lot more." This has been the case with every property I have ever bought. Every property!

The yield rises over time, like compounding interest in a bank account. That increasing income is what makes the properties I own ever more valuable to me.

If you are a speculator, or trader.. well I guess you would have a different approach to me. Speculating just doesn't suit my character.

by steven | 12th Nov 14, 11:06am 1415743583

just remember "this time it is different"

And no history is no crystal ball for the future.

eg In 1929 lots of people thought they couldnt lose, investing in the stock market.

Indeed some severe recessions or inflationary periods has seen people lose a lot if not the lot, eg US housing in the last few years. Lots of jingle mail.

regards

by steven | 13th Nov 14, 9:44am 1415825046

a) LOL, OMG talk about deluded. Before that huge fortunes were lost and the ppl who lost were not those necessarily those who gained/recovered. On top of that many, many ordainary people lost everything.

The people who has cash could buy at property and businesses at firesale prices and yes some, few made money. Those selling assets just about lost everything as did many common people.

b) You assume a recovery after this event with recovery stimualted by govn spending for the build upp to WW2. Maybe you think ww3 will be a good thing for your investments? even if glowing in the dark?

regards

by steven | 12th Nov 14, 11:10am 1415743800

No landlord subsidies, at all. CGT on capital growth, payable yearly for commercial property, 1/2 current income tax rate and hence no refund/rebate on losses.

and yes you are gambling that the market can only go up, and there is a bigger fool. (Or that the dips short term will be just that, short term dips and not long run corrections).

regards

by cowboy | 12th Nov 14, 7:16pm 1415772982

how can you justify tax of profit, but not carryover of losses?

by Zoltuger | 12th Nov 14, 12:39pm 1415749156

Curious to know how much of the new mortgage lending is true new mortgage lending - rather than changing banks (churn) or same-bank refinancing of existing homes.