Total monthly mortgage borrowing figures hit their highest level in nearly two years last month, while first-home-buyer borrowing topped the $1 billion mark for the first time

By David Hargreaves

First home buyers are continuing to step up, with the amount borrowed by this grouping hitting the $1 billion mark last month.

That's the first time the FHBs have borrowed over $1 billion since the Reserve Bank started releasing new mortgage lending by borrower type figures in August 2014.

The $1.116 billion borrowed by the FHBs in May easily beats the previous record tally for this grouping of $911 million - which was the amount borrowed only two months earlier.

Also, the percentage of the total amount borrowed recorded by the FHBs hit a new high of 16.9%, up from the previous high of 16.1% set just a month ago.

And it's not just a question of FHBs borrowing and nobody else.

The total borrowed in May, at $6.592 billion, was the highest recorded since June 2016.

That's very significant.

The RBNZ's 40% deposit restrictions for investors were announced in July 2016 and that - coupled with the banks starting to take a much more conservative approach of their own accord - helped pour a massive bucket of cold water over the investor borrowing.

Investor borrowing as a proportion of the total shrank quickly from regularly being around 35% prior to the new restrictions to as low as under 21% before the end of last year.

It's since started to pick up a little, with investors recording their biggest total (bearing in mind part of a big overall total) since September 2016, with $1.564 billion recorded in May. The percentage of the total, at 23.7% is just up a little from the 23.5% of a month earlier.

Yes, you would expect a bounce in the figures since Easter (which was in April), and there has been. But there was a bounce in May last year too and the fact is that the total in May 2018 was well over half a billion dollars more than May 2017.

These resurgent figures come despite the overall housing market appearing to be flat.

The rising figures do follow on though - and do appear to very much link back - from the RBNZ loosening the 'speed limits' for banks on high loan to value ratio (LVR) lending and also loosening the investor deposit requirements a little.

The RBNZ will be watching the rising figures closely and with interest.

RBNZ Governor Adrian Orr indicated last month that the central bank would not consider further loosening the LVR restrictions at least till its next Financial Stability Report is released in November.

This rising figures are likely to push the RBNZ into waiting longer before a further relaxation of the LVRs.

It could well be now that the LVR rules will not be relaxed again this year.

The central bank would not want to risk reigniting the market at a time when the construction industry is still struggling to make an impact on housing shortages, particularly in the Auckland area.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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108 Comments

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This matches the little bump we saw in volumes last month....June is going to be interesting.

And still $2,019m of this month's $6,592m was interest only!! Investors were only $1,564m so there are FHB/owner occupiers interest only. Madness at this stage in the cycle.

Yeah, look at what’s happening at the Aussie banks and international interest rates general, and the general direction of travel for aggregate mortgage lending is pretty clear ie it’s going down.

And yeah, I also struggle to get my head around those interest only numbers

Let me help you to get your head around the interest only numbers Bobster, repeat after me;

Always go up, Always go up, Always go up, Always go up, Always go up.

Never fall in New Zealand, Never fall in New Zealand, Never fall in New Zealand.

We're Duffrunt, We're Duffrunt, We're Duffrunt

Always go up, Always go up, Always go up.

Great invustment in your future, great invustment in your future, great invustment in your future.

Has that helped you to get your head around the interest only numbers.. if not I am running another seminar same time tomorrow to help everyone understand.

Always goes up.

Oh Dear, Ronovations charged me $2000 for that advice, and you are giving it away free!

Does this mean I've joined the 'sharing economy?' I learnt all this from Andrew King, always go up, and Tony Alexander, always go up. Couple of great guys, always smiling... Always go up. I appear to have, always go up, developed, always go up, Tourette's syndrome...... Always go up!

Hey, speaking of which, I found the attached which quite amused me. Is this guy Ron Hoy Fong, cos what he is saying kinda sounds like what Ron would say!? Sounds like he is talking to a room of FHBs or investors, cos at about 5 mins he says “I was better off than you looking to make a purchase”. Sounds like some property investors seminar. There’s certainly a “fill yer boots” feel to this, it’s full on selling mode...tony Alexander, the friendly economist from Anglo Irish bank

Boy, he’s a hostage to fortune with this on the internet....”structural decline in interest rates”....”internationalisation of property markets”.....he even trots out the “households now have 2 incomes line” (I mean, didn’t that happen in the 80s!?)

It’s a bit scary that it’s dated from April 2018...he’s out hunting the fresh meat. I mean, he’s plainly there for one reason, being to drum up mortgage business for his bank!?

https://youtu.be/HnnmmQb1XO4

Welcome to the wild west Bobster.

You gotta know when to hold em, know when to fold em, know when to walk away, know when to cry corruption and some people should be in prison for abusing their position within a lending institution.

just saying.....

Quote "bugger just bugger, we are losing ground here, we got to step up the campaign boys and not let the enemy have a win. We have lost some of our best campaigners, you know the ones. What do we need, more comments, more repetition and more dubious data until our mad message gets through to the masses and they start believing our angle. NJ turn up the volume on the broadcast mic and on the double, B keep up the propaganda, if nothing else it gives us a good laugh"

Are you ok....I’m worried about the voices in your head

Ha-ha-ha-ha :) It does read like someone arriving to a party, high as a kite, just as its being closed down!

Did you see that tony Alexander video I posted just above, I seriously thought it was from years ago.....but no, it was April 2018!? Sorry, but the guys a phony. A shameless salesman for his bank. He reminded me of one of those economists for the Irish banks around 2006. And some on here just lap it up, “oh gee that tony Alexander he’s so nice and so clever, he’s really looking out for us”. No, he gets paid big $$$ to do this, and his aim is to take money of your pocket and put it in the banks pocket

https://youtu.be/HnnmmQb1XO4

I hope if it all goes pear shaped he has the decency to publicly apologise for his sins, like Jim Power did

http://www.thepropertypin.com/viewtopic.php?f=4&t=29833&start=0

Gosh! Its pretty revolting. The way he rubbed his hands in the beginning says it all! Its too big to fail and the banks are getting nervous.

RP - It looked a bit like Dracula being invited in for dinner... He rubs his hands and all that was missing was for him to tuck a napkin into the neck of his shirt.

Obviously Tony Alexander is not a friend of some folk on here and sarcasm towards him or anyone is just childish. So who do you believe ? the DGM'S or top economists ?? FHB's are out in numbers getting on with their lives and jumping through hoops with banks to be able to get loans so no easy lending going on now. Alexander rights his own comments and the BNZ clearly states at the bottom of his Weekly overview that the comments are not the banks, sometimes he gets a bollicking from the bank about his comments. Love him or not he has a very good track record and has helped give me confidence over the last 20 years to get on and ignore the negative views of others and invest. Will he be proven to be correct going forward I think so but let's see time always proves. I know people who listened to the DGM's in the 2008/9 period that are just buggered now, but the DGM's will say it's different this time ! I have had many tenants particularly in the late 90's early 00's who owned their own homes and sold up after listening to DGM's many of them known figures in the financial world their impact on these people was sad. FHB's listen to people who have a succesful track record not DGM's because people with an axe to grind are not happy generally with their past decisions and tend to be resentful of those who ignored the gloom and reside in a financially independant place and that place is where everyone would like to be. Please no childish sarcasm lets be adults or not be here.

Shoreman, I'm already wise to those selling vacuum cleaners. You? Today, they sell money, houses and life insurance.

RP Thankyou for your almost non sarcastic reply, I assume you are linking Tony to vacuum cleaner salesmen ? He doesn't sell anything, people choose to go and hear his opinion and ask him questions, and that is what he was doing in the video. His opinion is based on the lastest economic data and the supply/demand effects in the economy and there is no emotive clap trap in his opinion. It is a personel choice to follow his opinion along with other economic commentary's but not believeing his opinion does not make him wrong. Good day to you.

Dude, open your eyes. He was trotted out to front a mortgage marketing session for the BNZ. He was hung out there like a piece of meat. This is part of what he gets paid to do ie bring money in the door. He is there to support the business of the bank. He is not a free agent, he is not a rebel.

Look at the video. It’s dated April 2018, the bubble is at its apex and people are concerned about what happens next. His talk is entitled “why the bubble won’t burst”. It looks like it’s aimed at investors. He is like an amiable dog trying to keep the sheep going through the gate in an orderly fashion.......could it be more obvious!?

Sorry if I sound strident on this but people here are really too believing and trusting about what comes out of the banks. They are not part of “the team” and they have no ones interests at heart but their own. And given half a chance they are quite willing and able to blow up an economy.

He’s a paid shill for the banks. That video proves it, he was dangled like a piece of meat to add intellectual credibility to what was a pure BNZ mortgage marketing exercise. Residential mortgages are probably 70% of the banks loan book, he’s here to sing the praises of property, and if he failed to do that the BNZ would be telling him to get another job. The idea he is some sort of “independent voice” is farcical, the BNZ allow him only such leeway as will validate his veneer of “independence”. He is hopelessly compromised. He bullishness on property over the last whatever years is not evidence of his infallabity or power of analysis, it’s merely evidence of the happy coincdence that he was singing that tune for the bank during the most ridiculous international credit bubble in history. In every real estate bubble the banks have rolled out their shaman economists to explain to everyone why they should buy what the bank wants to sell, and everything will just be alright cos this time it’s different. He is no different from any of the economists rolled out by the Irish banks to explain why their bubble was different. And no doubt if there is a serious correction he will be calling the bottom early and often, over and over again. We’ve seen this show before. What these guys have to say is of interest, we should listen, but they are not independent and the interests they represent is the bank that puts money in their pocket, not your interests.

Bobster or should I say 'Dude' we are all allowed our own view. Tony's history in my view is remarkable and certainly has been a catalyst for people like me to gain wealth by understanding the drivers of what is happening in our economy rather than randon emotional statements common on this site. I personally don't even bank with the BNZ. We will all beable to look back at this time and really know who was talking 'porkies' , my money is on Tony. Good day to you.

Forgot to add link http://tonyalexander.co.nz/ for his latest overview read it, you may enjoy.

Simpleton

NJ - I assume that was a sarcastic remark ?

NZ follows Australia in most things. Certainly well documented in the combined housing market effect. Melbourne and Sydney lead the way up and lead the way down.Best we can hope for is 7 years if mild stagnation here.
https://i.stuff.co.nz/business/money/80588475/nz-and-australias-housing-...

Does interest only include those on revolving credit who may be paying back principle?

Of course. Bridging finance as well.

In that case the levels of interest only, don't necessarily tell us the risk level. Would be more interesting to see what proportion aren't paying back principle, although i doubt that data is available.

Caveat Emptor ......... for those of us who studied law

Cui Bono?

True. The banks won't write down a borrower's loan in case of a drop in property valuation.
This has been the case among US borrowers for years following the GFC, when they bought high but could not sell their properties to settle their borrowings.
FHBs make the mistake of thinking that they are in it for the long haul and a short-term drop in valuation won't affect them. However, they fail to price in the risk from higher debt servicing costs and the possibility of losing their job during an economic downturn.

Gotta feel sorry for the FHBs. I can't imagine having to splash $600k+ for an entry level house in a bad area of Auckland - let alone doing it when the market is looking a bit dicey and interest rates could go upwards. But if they don't buy they run the risk of never owning. Tough call...

Or when you're paying $500+ a week in rent, for a few extra hundred you could own your own home and feel like you're getting somewhere in life. Could be a different story when rates go up though...

'a few hundred extra' isn't to be sniffed at for most. 600k loan, over 30yrs at current 2yr fixed = $700pw (interest alone >$500) Add rates, maintenance + insurance.... it's more like $300+ per week extra. Which isn't small. Could invest that $300 in other asset classes of course...

Add in the fact that it looks like many of them are pulling out their kiwisaver money to buy, and they are losing the compounding gains on that to buy an asset that is probably not appreciating (in auckland at least, in the FHB type properties).

http://www.kiwisaver.govt.nz/statistics/monthly/withdrawals/
now up to 3950 people raping their retirement fund ( of a collective $89.3million) in a month to buy a house. This is 22% of the money that was put into kiwisaver last month. (may2018)

Interestingly, the number of kiwisaver exits due to permanent migration is only up 10% on a a year ago, from 18651 to 20070. Contribution holidays are also not up significantly. I wonder if this is because you can no longer pull your money out by moving to Australia, you now have to transfer it to one of their super schemes.

Of course you don't have to apply/go on a contributions holiday if you aren't earning in NZ..

Although any money they put into the principle of their loan is essentially savings making a tax free gain at the loan interest rate - which is probably better than what KiwiSaver would do.

You must have a shitty kiwisaver. A growth kiwisaver should be making double digit returns.

Until it makes that 30% loss next share market crash.

Down 30% on a non leveraged kiwisaver account is down 30% of your equity. Down 10% on a house you only have 20% equity in is 50% down on your equity. Down 30% on the house and you'll be paying that mortgage for another 8 or so years just to get back to zero.

Haha wrong, funny but wrong. The amount of debt doesn't change regardless of what happens to price.

Did you see the word debt in any of those posts.. we were talking equity. Debt is not equity, although the way some of the specuvestors on here post they might well not know the difference.

Banks have NZ by the proverbials. Either lose your deposit in a house, or lose your deposit in an OBR. I know what I'd choose.

Or keep money offshore. If you're of the view that the NZD will fall it's a double win.

That's the story Z P .... that is what I am hoping for, so to clear my debt and be finally out of the grip of the banksters/landlords et al in NZ ! .....true freedom !

Also, just to add, watch the Australian banks, as whatever happens over there, will make it's way across the ditch to here......

ps "mortgage" in Latin means mort = death & gage = grip...... so "deathgrip" ....says it all to me !

Indeed.

Here's the latest on the Banks of Oz: https://www.bloomberg.com/graphics/2018-australia-consumer-debt/

Speaking of which – there appears to be another 24 hour mid-winter special currently on with the NZ$.

Oh custard that's not a sale! Same as the Auckland housing market the 40% off sale starts on Boxing Day.

Quite right – what was I thinking!
Boxing Day in currency land – 50c to the $US – now everyone gets a bargain?
It’s happened before – and we indeed live in interesting times.

Does this outcome correlate with data we saw earlier in the year regarding Kiwisaver withdrawals?

I wonder if there will be any liquidity left come this spring?

http://www.kiwisaver.govt.nz/statistics/monthly/withdrawals/

Its getting worse. Up about 50% on a year ago.

FOMO is for FOOLS.

I would say FOMO was quite reasonable 10 years ago.

The presupposition there JimboJones is that there was FOMO 10 years ago - I'll take your inference on that. I'm more thinking of FHB's who are plunging themselves into 'mortgage stress'.

Quick question for David Hargreaves..
The data in the article says new lending but doesn't specify whether it was all new lending for acquisition of property. Is this relating to purchase data or does it also include re-mortgaging?

It's new loan commitments, regardless of purpose. It includes top ups, increases in revolving credit (even if unused) and refinances.In periods of the cycle when there are more refinances, it will not necessarily lead to a lift in the overall borrowing, just an indication of churn. The s-31 is a better indication of that.

So either way probably not a good sign of any improvement in the savings ratio of households.. thanks Mister B

Agree

Obviously the first ho e buyers are not taking any notice of the Doom and Gloom Merchants on here.
The FHB could be buying property all around NZ where there is still value, and not in Auckland so much.
If people are waiting for KiwiBuild 60m2 box’s on a postage stamp section they will be sadly disappointed!
Another day another change of plan from the COL, re KiwiBuild!
Don’t worry about bringing in prefabs. Today’s idea is Bring in 30,000 migrants to build them.
So much for reduced immigration from this lot!

It’s okay you just send them back when they’ve finished building the houses.

Maybe send them to Christchurch might help prop up values down there.

Take your point TM2 – I’d just be a little queasy as a FHB jumping into the market right now – especially Auckland – and where Auckland goes, ultimately the rest of NZ follows – to one extent or other.

If you’re a FHB and your job / income is rock solid and it all makes sense – go for it.

If you’re a FHB throwing caution to the wind and jumping in on the back of a 5% or 10% decline but nothing else – I don’t know so much. If things don’t work out you may well not be another HB for a long time to come.

https://i.stuff.co.nz/business/money/80588475/nz-and-australias-housing-...
Sydney and Melbourne could be down for three years.flat for a year, then modest up swing. Puts our next real upswing(above c.p.i accumulation) about 6-7 years out from now.

LVRs are working perfectly, why would you consider loosening them? Just keep them permanently at this level. The only thing better would be DTI.

Yeah, see the attached for what is happening in Aussie re DTIs. I think the UK is already operating on the basis that banks must have 85% of lending at not more than 4.5 DTI. I can’t help but think that our regulators have just missed the boat on this stuff. Even the aussies are trying to claw it back now, while ours seems to be saying “move along nothing to see here”

https://youtu.be/O4xudY2Z5lY

I think one day we may well regret not going down the DTI route.

Some initial pain / adjustment – but ultimately some degree of pricing / financing sanity as the reward.

Perhaps too much to ask of the machine.

DTI's have been in place in UK since about 2010 and over 4.5 times multiples in my experience have only been offered where the borrower has equity of 40% or over (ie plenty of bank security). The issue the Southern hemisphere banks have is that because DTI's have not been introduced and the bubble extended a further 10 years introducing them now would create an overnight banking collapse. Gently gently will be the way the Reserve bank has to go starting at 6 times DTI. couple of years move it to 5.5 times, then Winnies 5 times. It'll take at least 5 -6 years though to fully implement (assuming the banks don't implode in the meantime anway).

Fun times. It's almost tempting to head back to the UK for a while to let it all play out from a distance.

That is very good news Bob - Do you actually own a house or aspiring to purchase one?

TM2 reading my thoughts...lol.
DGM are mourning tonight, ... watch as they come after 6 pm --- they cannot believe that no one is listening to their stupid advice, and some are still crying wolf non stop , so blinded with few doomsday theories ....
The flavour of the day is rising interest rates and watching out the Aussies etc ...and round and round they go while clever people are celebrating new house warming parties ...

Wise FHBs and others are buying while the market is affordable and steady ( something that the DGM are struggling to comprehend) - wise folks know that they don't want to live in the dog house or shoe boxes promised by this noob CoLs .. they will leave these to others who believe in Santa Phil.

One thing to take away from these results is that Demand is Strong and sales are On - As for those who bemuse themselves with dreadful Auction results and reading between the Tea leaves of financial news , Just... ooops !!

There are good opportunities out there for owners to grab, I was privy to a sale that was too good to be true last week.

Watch for the June numbers , but most importantly the July 18 numbers.
prices are on the rise all the way to October - not too much, but positive 2-5% is in site.

Awww, stop it......you are stoking my deep FOMO!!! I just can’t take it any longer......I’m in!!! Where do I get my koolaid!!??

Oh well, detection of sarcasm isn’t one of your greatest strengths.....never mind, I’m sure you have others

Neither is upper case management....

Hi Eco Bird,

DGM are dead in the water.

Certainly, FHB are not interested in listening to DGM.

People like Retired-Poppy have been giving FHB a bum steer - but FHB are much wiser/smarter than him.

TTP

TTP, FHB are wise to wait rather than pay these prices. In Feb 2017, you said so yourself then backtracked. It's sad to see they are borrowing such huge amounts on 30-year mortgages at lofty prices. A lot appears to be interest only terms too. This is not a wise time to buy. This is a suckers market.

There's no bum steering going on here apart from that of a clueless TTP who changes his forecasts every month then jokes about it when pressed for supporting facts.

I very much doubt any banks offer FHBs interest only mortgages.

What makes you say that Zachary? New lending on Interest only to owner occupiers (including FHB) $1,236m here; https://www.rbnz.govt.nz/statistics/c32

Man, why would owner occupiers go interest only for new lending...? I mean, doesn’t that show you cant really afford that house? Good grief

I suppose if interest only makes sense for an investor it makes sense for a FHB as well. For example, historically, it would be more sensible to pay $650 a week in interest than it would to pay $650 in rent. If you bought a house in Auckland ten years ago for 300k and paid interest only you would now have about 300k equity minus about 50k in other costs like rates and insurance.

However it doesn't make so much sense for the banks as landlord's are generally managing things as a business while FHBs actually live in their homes. Landlords are paying off lump sums or paying off the entire mortgage regularly as they sell properties.

I do suspect the revolving credit is skewing these figures. A lot of revolving credit is never actually used and if it is regarded as an interest only mortgage for its full amount then a lot of theses figures are meaningless.

An investor buys to make money from capital gain. An occupier buys to acquire a home. How does it make sense for an owner if at the end of the loan the owner owns no more of the home than it did at the beginning? Interest only is a terrible idea for an owner occupier.

Lenders are doing everything possible to get FHB's across the line. It's still very much a selling culture in play. It's not pretty.

Bobster, I agree. This reads like a honeymoon that will end in tears. Note the RBA is now losing market influence due to rising wholesale funding costs. As the punch bowl is drained, it will happen here too.

Eco Bird, as a contingency, talk with your "business partner" before it's too late!

Hi TTP.

Long time no speak.

I think it is very admirable that every day you come on this site, spend hours and hours writing posts that very few people seem to read and even fewer appear to agree with. Given that you are probably in the lower quartile (thought I'd use a term you'd understand), for overall thumbs up on this site. I thought that I would offer you my hand in friendship. We don't have to agree on things, I admire your single mindedness.

As a tribute to you and those like you (who may also be you) or who are, at least in the same boat as you, maybe even look like and feel like you, highly leveraged, unloved by many, possibly needing lessons in grammar (not double grammar), just plain English - I would like to offer you a homage to you and all you property addicts.

https://www.youtube.com/watch?v=2SlwV7mtsmw

I just wish there was an option to block his posts. Credit for consistant noise though. Still reckon its a reset or mega inflation. Current govt voted in to acheive the first option.

Time will tell.

I use a Chrome add-in called Highlight This! which allows me to highlight lists of keywords. Have created a list of the usernames of the property investors which highlights them in National Blue. Helps me know which posts to skip. I have other lists in different colours too but cannot disclose who is on which list :)

Hi Nic Johnson,

Thanks for your offer of friendship - always good to have friends. So delighted to reciprocate.

I don't take too much notice of the thumbs-up ratings here. I'm well aware that my views are generally unpopular - despite my predictions being pretty much on the mark. I think you're being a bit generous saying I fall in the lower quartile. I reckon I'm easily within the lowest decile. Clearly, some people have an implacable dislike of me.

My contributions do provide a legitimate viewpoint - albeit a minority one here. I'd like to think I add some balance to the majority viewpoints expressed here. Inevitably, my posts cause some controversy - and often a colourful debate. I don't think that's a bad thing.

I don't spend "hours and hours" here. Probably more like 20-30 minutes on most days - in a few short bursts. Despite my widespread (and increasing) unpopularity, I enjoy coming here.

I find property markets interesting but wouldn't say I'm addicted. I'm not an active buyer or seller of property and have never had any ties with the real estate sales industry. Neither am I a fan of the industry.

My interest lies more in thinking and writing about property. I like delving into historical stuff on local property markets. At the moment I'm focused on the Palmerston North property market over time - and have come across some fascinating material (such as when Massey University was established there in the early 1960's). I enjoy visiting Palmerston North and think of it as being a slice of middle-NZ - unpretentious but with a relatively well educated population.

Sorry, if I make a few foibles with grammar. Clearly, I need to improve on my current standard! And thanks for the suggestion about plain English - yes, I should enrol for a course.

TTP

Mobile phone version of the page doesn’t have a like button or I’d like more of your posts. Don’t have the time to read and respond to comments on this site when I’m near a computer. This site is more of a read whilst walking / standing in queue / waiting for an elevator type deal for me.

Excellent reply - on so many levels - got me laughing - Bravo!!

TTP. I want to adopt you as my kids stubborn old person to learn from... do you play golf and can we play in palmy for an intro? Nic

A warrior is nothing without an enemy to battle. Even a keyboard warrior

HI TTP, ( corrected , sorry my friend - shows you how childish this lot is LOL )

lol, indeed ... I don't bother replying to RP or any of the other DGMs which is driving them mad at times as they keep provoking us with insults etc ...After all, arguing with a fool makes you look like one ...

Unfortunately, they are brainwashed and politically blinded by this Lot of losers running the country ATM , but I doubt that anyone, regardless how stupid or cynical he /she can be, could not reason out the facts, numbers, trends, and the basic fundamentals right in front of everyone's eyes.

What would they achieve by cursing and insulting landlords or investors?
this stupid hatred and envy will eventually stop ...

The market is sound my friend, and the positive signs are there ... this CoL are unintentionally enhancing the current values in the property markets actually. New built $1M+ houses around AKL are getting sold like hot cake, so are H&L packages .

People realise now that owning a decent 3 or 4 bdrm house on a piece of free hold land is becoming more difficult and expensive by the month, so I reckon wise folks are out there buying after they saw first hand how useless and disappointing this CoLs are and any hopes for them to change things around in the foreseeable future are evaporating fast. the best that they could achieve will be building shoe boxes which very limited people would buy in 2-3 years.

I guess people also realise that this CoL will not live to see a second term to follow up on any of the BS they are feeding the populous ( as PT puts it: building the foundation for KB blah blah) - I guess most folks seen the emperor's butt naked and have drawn their conclusions after the first 9 months in office.

Hence, it will be a busy winter and interesting spring this year.

Introduction of DTI and other punitive measures will only make things worse and get more people to rush in before late .... but it is all good news for landlords.

Who is TPP?

TPP is probably a relative of TCP perhaps or maybe PRC...? I think TCP is something you may put on a wound to stop an infection or was it infestation, PRC, I'm not so sure if that was the infestation. TPP - hell you'd have to ask someone who got trapped in the debt pen. Have I helped at all custard? Or are we all lost in acronyms now?

Indeed you have.

Saviour beckons - could I suggest WD40 or CRC.

Both useful in addressing annoying squeaking.

well done

TrannyPacificPoint?

Your last statement indicates your anxiety of the looming changes..

Ganglords enjoy while the party is on

What a dumb sucker.. did you notice the time you made this post..

Duh.. are your brain cells damaged...

Good grief - sight!

FHB forgets that one should never buy in the falling market.

Market may or may not go down but one thing is that will not go up for sometime so why rush

What – cheating – surely not!

“The police case was Steven Li and Fan Yang, linked to companies running Assignment4U, were providing "cheating services" for students to fraudulently submit purchased assignments as their own work.”

Well, at least the sanctity of the property market wasn’t tarnished!

“The police also alleged mortgage fraud was committed by several members of the Li family - which was denied by the respondents.”

Well – that’s certainly disappointing.

"Lending to FHB was +34% higher than in May 2017. Lending to investors is down -36%"

In my opinion a sure sign that the property cycle has peaked. Who knows more about house values,investors who have been buying for years or FHB's who by definition are new to the market? I fear a lot of FHB's are going to get hurt

But isn’t this to do more with changes to lending settings imposed by RB and banks rather than investors pulling back? If this site is anything to go by I don’t think investors have any greater gumption than FHBs. If prices look like they are going up investors will want to fill their boots. The more prices go up, the more the investors want to buy

I know for certain some of the fhb classified market are investors. I know people doing this. FHB on interest only should be lumped in the investor market largely would be my marginally educated guess.
I recently got a mortgage, amazing what this does for you as far as business funding is concerned. Its absolute insanity, the bankers talk and act like there will never be a downside... they are nuckin futz.

Not surprising at all. How long do people wait before a buying. Shelter is a basic need and owning a home is a security people need. Generally home owners are happier in life as your biggest purchase in life is secured. If you run into trouble paying for it, you should have never been allowed to buy it. All new lending is stress tested by the banks so I don't expect they would lend to people who can't afford. I see a good window for people to buy before any LVR loosening and markets taking off again. There is no crash happening here. Properties just taking longer to sell as vendors holding on until they get their price.

You do realise that the only winners in todays market are the financial institutions.
Im sure many people with $1.2m mortgages paying 6k a month (currently) for the next 30 years feel very priveleged and secure in their wise investment choice ! They get to gift Bank execs $1m in interest over the next 30 years !! Oh the humanity !!

The other thing, is with Kiwibuild homes marketed at $650k. How many Kiwibuild home owners who take out a $550k mortgage @ 5% p.a. will be able to stomach a 2% interest rates increase (i.e. a revert back to historical interest rates average) when they come out of a fixed period? An extra $150 per week over 30 years.

Forget about the Bankers, its depositors like Retired Poppy and I that will have our snouts in working people's pockets for the next 30 years e.g. based on current one year TDs I'm soaking up 2/3rds of the interest income.

Would be good to see the mix by region

Auckland had its 2nd worse sales volume in May since 2011 so I cant see the FHB borrowing in Auckland expanding at the moment, that would defy logic in a falling Akld market.

I personally know of two FHBs in Auckland, they are borrowing in the region of 800-900K for their home. It's just incredible how they can afford the repayments

The real collateral damage of the one in 50 year household credit bubble and resultant high property prices are the financially unsophisticated owner occupiers, particularly first home buyers, and upgraders who are paying high prices for houses in Auckland and maximising the amount of debt in order to finance their house purchase. They will be saddled with large amounts of debt relative to their income levels for many years. By financially unsophisticated, I am referring to those who do not understand the term housing credit bubble.

They are people progressing onto the next stage of their life journey - go to school, get a job, get married, buy a home, have a family, etc .

These are honest hard working people who have spent many years doing the right thing making financial sacrifices and saving for their deposit in order to buy a house. These are many of our friends and family, and they are unaware of the high risk of buying a house in Auckland at current price levels and under current conditions.

There is a high risk that these people could be making a poor investment and get no returns for many years, and could face negative equity for a period of years and take many years to get back into positive equity, let alone retrieve the full value of their initial house purchase deposit and principal payments made on their mortgage. If these people have a change of circumstances and are unable to maintain servicing of the debt, then they may be forced to realise those losses, resulting in the loss of their deposit and loan principal payments.

Restarting the journey to financial security can be difficult, given the emotional, psychological and financial stress the family experiences.

Just read the stories of those hard working financially unsophisticated owner occupiers who bought near the price peak, and taking on large amounts of debt and then got caught up in the GFC in Ireland, and the US.

CN - You have some interesting points, the only thing I would say is that is the same script people read in 2008 and 1999 some people missed out forever not getting in the market. If people can jump through the tough hoops banks require of them then they will be fine.

I recently looked at a some prefabricated houses at a 'show yard' and was talking with one of the sales people there. I asked what proportion of FHB vs investors bought these sorts of houses. She said it was about 50/50 and that the standard scenario for the FHB was save around 100k, 100k (give or take) combined from parents, and borrowing 800k!

I almost fell over.