Monthly mortgage figures show a decline in the share of new mortgages taken out by both first home buyers and investors

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.

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?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

28 Comments

It would be good to get some commentary on the numbers of loans, rather than just the dollars. Are FHBs borrowing more or less on average, and ditto for investors.

From one year ago (Aug2017 figures)
FHB loan numbers up 17% to 2201, and avg borrowing down 5% to $378k.
Investor loan numbers up 4% to 3642, avg borrowing up 6.8% to $344k

so assuming one count = one property, then investors are still buying 65% more properties than FHBs. Of course investor category probably also include developers so hard to figure out how many houses are being sold into the rental pool.

If you download the data file you can see the number of borrowers in each group - column T onwards in excel.

https://www.rbnz.govt.nz/statistics/c31

thanks, was already aware of that, just being lazy and wanted David to do all the hard work :)

With this Peters-led coalition everyone should take a breather , sit on your hands, do nothing because who knows what could happen next .

They might even ban your industry, trade or profession , without any consultation whatsoever

Its encouraging that if the dip is because FHBs are holding off for Kiwibuild, this indicates the Coalition targets are being taken seriously by people who need them most. Regardless of the reason, the fact more FHBs are holding off, whilst continuing to save, is a welcome development. No hurry, they're going to get cheaper!

Unfortunately the wait for a KiiwBuild home could be long and in vain.

Currently over 41,000 people have registered their interest in a KiwiBuild home. So far only 18 completed , and just 30 homes expected to be finished by the end of the year, and 1000 by next July. (Figures from Stuff 27 August)

It appears that like any lottery, there will be some winners but a lot more losers.

I wouldn't place to much importance on the number registered for kiwibuild emails, it means nothing. The numbers to look at are the number that enter the ballots. That will show how many want a KB home and can service a mortgage. And it needs to be individual applicants.. since an applicant can enter every ballot if they wish.

We registered, but aren't entering any ballots.

Yes, 500 went into the ballot for the 18 homes.

18/500 not good odds - less than 4% chance.

I wish you well in a ballot and getting your first home. A great step whenever you choose to take it.

Where did you see the 500 number announced?

Thats even worse than I expected. Just shows that either potential KB buyers can't raise finance because they really aren't that "affordable" to low or middle income earners, or the ones that can (like us) can see the KB homes aren't particularly good value for money.

And almost 1 in 25 is actually pretty good odds. I was expecting about triple that number.

From what I have seen of the KB homes announced so far we won't be applying for any of the ballots, they aren't great value contrary to what some are saying (blah blah subsidised socialist hippies.. etc).

Appears the 500 number was pulled from somebodies backside, the ballot entries haven't closed yet, we'll get the real numbers in about two weeks.

Got me browsing...

What the bleeding heck is this place, anyone know? https://www.trademe.co.nz/property/residential-property-for-sale/auction...

An early Chow brothers dwelling / brothel or some such?

Now we know where Cheryl spent her Outrageous Fortune. A beautiful brick and tile palace in Massey.

Looks like DGZ's Chineseium decorators have been busy inside. It surely gives the Sistine Chapel a run for its money.

Obviously an attempt to build a palatial mansion.

Imagine the views if the 7 consented sections are developed into townhouses.

Build a palatial mansion...in Massey. Heh.

Wait and Watch.
The show isn't over yet.

Heaven help us all... A reducing percentage of first-time buyer debt and a reducing percentage of investor debt... I do hope that we're not running out of 'greater fools' to prop this Ponzi up.... Remember without a first time buyer or an investor to start things off, from a position of non-ownership, then all the other loans just don't get written.

Remember it is the big debt from a first time buyer or an investor that allows everyone else the equity to move. Without them, well there's just a lot less equity for everyone and a lot less people moving.

All categories are higher dollar values than last year, although most are down from 2 years ago. FHBs are one of the few up from two years ago

Would be good to know how many of the FHB loans have a cross securitization with a guarantors property to reduce the LVR to the required level

WestieAJ

I have no doubt that the number will be enormous but that debt offering is also tightening already, probably one of the reasons for the decline in FTB's as a percentage...

I am struggling at the moment WestieAJ to understand how much is being withheld from the general public. No-where in NZ is there any sensible, questioning journalism about the predicament that the last 10 years neglect has got us into... People are getting knighthoods and jobs with banks and businesses when they should be put in stocks. Sadly I don't think the current lot are smart enough to recognise the issue either.

Nic Johnson - Can you please name me one journalist out there that is truly independent ? And that may explain your struggle.

mfd.

But the debt is being taken up on far lower sales volumes than 2016.. So more debt is being taken up by fewer 'greater fools' that's all.

Read my post above again. No one moves, has any equity to move unless there is a cash injection from someone not already committed to the market... (remember that this doesn't take into account foreign cash injection which in Auckland in the June quarter was 6.5% of sales.

A buggers muddle awaits.

Lower numbers than 2016, higher numbers than 2017. Again, numbers of FHB mortgages are even up on two years ago. As prices haven't fallen yet I don't think existing owner occupiers will have seen their equity reduced just yet. I wouldn't be surprised if it happened, I'm just waiting for the data to show up before jumping to conclusions.

Percentage of over 80% lvr loans on the increase, was in the 8s now double digits.

I would stop with the wishful thinking, and make concrete plans to deal with the market as is, not as you hope it will turn out.

Giving up on the idea of buying a house in NZ was the best decision I ever made.

Its the 20% increase in borrowing per person since 2014 that has me concerned. It means more highly indebted people who have been enjoying low interest rates. More families with high debts

You also hear many stories of landlords complaining they can't afford the new insulation rules because they are already making a loss on their rentals. Are they really sailing that close to the wind?

Sure we don't have teaser rates like the states, but is a 1 year fixed period at 3.99% really much different.
Rates could go up 2% or house valuations drop then same logic applies.

Not unexpected in this market. But good luck to the banks lending to those for Kiwibuild homes or high LVRs. See for example "BNZ is rivalling ASB with a special offer for Kiwibuild home buyers, including 95 percent loans for the government-backed homes. BNZ's new offer promises customers pre-approved loans for 12 months, rather than the typical two or three month period. The lender will also grant up to 95 percent LVR loans for the new build properties."

Another wee aside from San Diego. Auckland’s woes are pretty much akin to those in the valley. The next prospective governor is running on a platform of improving infrastructure and drive times, affordable homes and rents for all, schooling and combatting corrupt local politics. Have had many a conversation with all types of locals here whose sentiments and concerns with topical issues are not far removed from our own. The other big concerns here are regional fuel taxes and water rationing and shortages. Sound familiar?