By David Hargreaves
New figures show that housing investors grabbed the smallest share of new mortgage lending last month in at least two years.
In contrast, the amount of money borrowed by first home buyers rose in what was officially the first month under the new Reserve Bank 40% deposit rules for housing investors.
The RBNZ's lending by borrower type figures for October show that the overall share of new mortgage lending money going to investors in the month dropped to just 27.1%.
This series of figures has only been produced by the RBNZ since August 2014.
But that 27.1% figure is easily the lowest share by investors in that time, beating the previous lowest of 28.7% in October 2014.
The drop in investor share has been marked since the new rules were announced in July.
In September it fell under 30% for the first time this year, from just under 33% in August and from 37% in July and nearly 38% in June.
The new nationwide 40% deposit rule for investors didn't officially kick in till October 1. But the thing to note is that banks effectively applied the new rules virtually from when they were first announced on July 19 - so any dampening impact could be expected to show up in the figures from late July onwards. And it certainly did, but the impact has very much continued in the latest, first 'official' month.
The question asked now will be how long the impact lasts for. It's fair to say also that other factors apart from the new LVR rules have been in play. Interest rates are now starting to edge up again, while banks have shown signs of starting to 'ration' credit.
In October the total amount advanced on mortgages was $5.369 billion, with investors accounting for $1.453 billion. If you go back to June, the last month before the new 40% deposit rule was announced, the total amount advanced was $6.803 billion, of which some $2.564 billion went to investors.
The total October borrowing figure is down some $1.434 billion from that in June. But over three-quarters of that drop (over a billion dollars) is accounted for by the retreat of the investors.
Separately, the Reserve Bank's figures detailing Auckland LVR figures show that in the country's largest city the share of mortgages going to investors dipped below 40% in October, having been up as high as nearly 48% in June.
Auckland of course already had differential rules for investors previously, with the RBNZ having put a 30% deposit rule on for Auckland investors in October 2015.
This rule was replaced by the nationwide 40% investor deposit rule.
First home buyers get a break
In terms of the nationwide picture, it has been thought that the backing off of investors will leave more room in the market for first home buyers - and the latest figures would tend to suggest that's happening.
In the latest month first home buyers borrowed $768 million, which is $50 million more than in September.
If you go back again to June, the first home buyers then accounted for just 10.8% of the total borrowed right around the country.
In October that was 14.3%.
While the Reserve Bank has been very cautious in making any judgements on the success of the 40% investor deposit rule, it is likely to be delighted by the latest figures.
And the RBNZ will also likely be pleased with the latest figures showing the proportion of new lending that's on interest-only terms. This had been growing earlier this year.
Since the July announcement of the new investor LVR rules, the proportion of new lending being done on interest-only terms has fallen from over 40% to about 35.5% in October.
Investors have again been a significant influence in this fall.
As of June investors accounted for 52.5% of interest-only lending. This figure had dropped to 40.4% by last month.