Mortgage sizes soar

Property

Reserve Bank weekly figures show new record highs for amount loaned as mortgages and the size of the mortgages

9th Mar 16, 4:09pm by David Hargreaves

By David Hargreaves

A new high water mark was set last week both for the amount advanced in mortgages and for the average size of those mortgages.

The Reserve Bank's 'experimental' housing loan approval series shows that mortgages totalling $1.679 billion were approved in the week ended March 4.

That surpasses the previous record of $1.591 billion set as recently as the week ending December 18, 2015.

However, in the December 18 week there were some 7777 mortgages approved.

In the past week there were just 7096.

This gave an average amount per mortgage of $236,600, which is an all-time high.

The surging mortgage sizes and overall amount approved comes at a time when the RBNZ has put in place new limits for Auckland investors aimed at taking some of the heat out of the Auckland market.

Recent sales data, particularly out of Auckland, have suggested that the market has indeed dipped recently, but it's not yet clear whether this may in part have been due to the market having something of a 'pause' after there was a surge in activity ahead of the November introduction of the new measures.

The RBNZ has indicated it wants to see February and March sales data before starting to reach conclusions on the effectiveness of the new measures.

The fact that mortgage approvals remain so strong will give the RBNZ plenty to think about ahead of its decision tomorrow on interest rates.

The central bank is expected to leave the Official Cash Rate at 2.5%.

However, because of the relative absence of inflationary pressures, the RBNZ is coming under increasing pressure to lower the rates - and it is widely expected to open the door to such reductions in tomorrow's statement.

A big concern for the RBNZ, though, would be what further rate reductions might do in terms of further fuelling the house market.

Mortgage approvals

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Source: RBNZ

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18 Comments

by JB | 9th Mar 16, 4:34pm 1457494446

Wonderful news !

What could possibly go wrong ?

Pity about the dairy industry - still no problem there either as the smartest in the land have just assured us all again that this is just a temporary blip.

Let's hope they are right.

by Machiavelli | 9th Mar 16, 4:53pm 1457495611

It's like a train wreck in slow motion. But rather than watching it, I'm on the train... Best buckle my seat-belt.

by BadRobot | 9th Mar 16, 5:34pm 1457498060

....and the train wreck is worldwide.

by MortgageBelt | 9th Mar 16, 5:02pm 1457496142

What sort of Auckland house could you buy with a 236k mortgage?
Would be interesting to see Auckland only new mortgage size, excluding topups.

by sharetrader | 9th Mar 16, 5:20pm 1457497242

yes if you split auckland out would make the eyes water, for every one over 236 you need one under to balance it so you would have most of the rest of NZ plus the aucklanders that brought in the 70's etc balancing the auckland new mortgages

by Cowpat | 9th Mar 16, 6:13pm 1457500421

Sharetrader , that's not how averages work. As a sharetrader you should have a better understanding

by J.C. | 9th Mar 16, 7:24pm 1457504651

Yes, first home buyers are probably borrowing higher than the average for houses priced lower than the average.

by Simon | 9th Mar 16, 5:19pm 1457497185

NZ property investors filling their boots in the regions in response to 4% mortgage rates. Plain and simple.

Auckland over last few years has been a chinese dirty money story, NZ property investors have been sitting scratching their heads as their equity sky rockets but not motivated to buy into auckland due to pathetic yields - Now they're buying in the regions as its too easy to buy a 7% yielding property in P.N, borrowing the lot at 4% against large equity gained over past decade

by Stephen Hulme | 9th Mar 16, 6:59pm 1457503165

That will pay for the record number of car imports.

by BadRobot | 9th Mar 16, 5:42pm 1457498522

I am in Chch - I've looked at a couple of rentals that appear to have a new coat of paint (done badly, one the leaves of the bushes had been painted as well and one of the bedrooms had no light fittings - there was a light switch but I suspect the hole for the cable had been plastered over - strange there was no picture of that room on the TradeMe listing) - but neither would I be temped to buy. More interesting was why were they selling....

by dictator | 11th Apr 16, 8:57pm 1460365065

I'm assuming they've already collected the insurance/EQC payout and time to sell to foot someone else with the bill.

So many broken properties down there that aren't worth anything if you value them correctly.

by CJ099 | 9th Mar 16, 5:37pm 1457498231

Yes and the real people that are going to get hurt are the NZ Citizens and residents, with families that have been desperately trying to get on the the AKL housing market. Once the AKL property market bubble has finally burst there's going to be a lot of home negative equity and property repossessions from the banks. I witnessed this in the UK a few years ago and I do not want to see it happen here!

And has anyone noticed that Hong Kong residential property market has dropped by -70% recently, is this not in anyway a bit of an eye opener of things to come considering how dependent we are on Asia (And particularly China).

by BadRobot | 9th Mar 16, 5:45pm 1457498758

Sales were down 70% - price only 10% - one agent hadn't made a sale this year....

by Hamish | 9th Mar 16, 7:44pm 1457505842

Did NZ housing stock suddenly shoot up last week?

by Smalltown | 9th Mar 16, 9:07pm 1457510825

We mightn't be any good at cricket but we can sure show those Aussies how to ramp up a bubble. Take that learners - yeah, suck it up losers.

"Home loans in Australia fell more than expected in January, indicating that even with record low interest rates some steam may have gone out of the property market."

http://www.ft.com/fastft/2016/03/09/australian-home-loans-fall-more-tha…

by Penguin | 10th Mar 16, 8:32am 1457551955

I don't know how the statistics are made up but I imagine with the recent new cheap mortgage offers many are re-mortgaging p(and probably taking out cash to buy a new car Etc.)at a lower rate hence the relatively high issuance.

by cut.it.out | 10th Mar 16, 11:26am 1457562379

low interest + huge loans + overpriced houses = inevitable wealth transfer...

by scarfie | 10th Mar 16, 12:09pm 1457564993

Did this article stem from my comment about non-resident cash buyers shrinking the money supply? Anyway it appears my assertion that the double whammy effect is creating a non productive asset bubble that driving up the cost of borrowing for resident buyers. Sure to end well.

One statistic I would like to know David, if you have the time, is the percentage of residential mortgages against the M3 money supply. It varies a bit and was dropping, which is a counter to my assertion.