By David Hargreaves
The strong recent gains in share of the new mortgage market by first home buyers reversed somewhat last month, according to new mortgage lending by borrower type figures compiled by the Reserve Bank.
Also showing a decline in August after a recent slow recovery in market share were the investor grouping.
One of the features of the new mortgage lending figures in the past 12 months has been the surging of the FBHs, both in terms of share of overall market and in terms of the figures borrowed.
In the last few months, however, these figures have been a bit up and down. In May the FHBs borrowed over $1.1 billion, which was the most since these figures began being released in August 2014. Similarly, the market share for the FHBs in that month was a record high too at 16.9%.
However, in June there was quite a sharp drop off, followed by a sharp rise again in July and now for August another drop.
In August the FHB grouping borrowed $833 million, which made up 15.4% of the total of $5.402 billion. This compared with $910 million in July, which represented 16.5% of the $5.523 billion in total.
The recent figures might suggest the FHBs have 'peaked' in terms of market share - and presumably there may be some question of whether at least some would be FHBs are awaiting the ramping up of KiwiBuild.
Meanwhile, the investors, after being whacked in mid-2016 by new RBNZ rules meaning they needed 40% deposits (since reduced to 35%), retreated rapidly from a position in which they had been doing something like 35% of the overall mortgage borrowing.
The share of borrowing for investors bottomed out at just under 21% in December 2017.
However, from the start of this year after the RBNZ relaxed the rules very slightly, meaning investors needed just 35% deposits, the share of borrowing by this grouping had been rising very gradually.
After topping out by reaching 24% as of July - which represented the biggest share of the borrowing since May 2017 - investors borrowed just 23.1% of the total in August, which wasn't a lot different from the 22% share of the market this grouping had in August a year ago.
The latest figures suggest that things are fairly subdued out there and so it will be interesting to see what the Reserve Bank makes of them.
The next time the central bank might consider further loosening of its lending restrictions would be late November, when it issues its next Financial Stability Report.
Crucial upcoming figures for the Spring housing market will be available to the RBNZ before that FSR is released and will have a big bearing on whether any further loosening is contemplated at this stage or not.
While economists have suggested its possible there will be some further loosening of the lending rules, any change is unlikely to be a large one and would of the kind of percentage 'tweak' that was seen at the start of this year.