Latest Reserve Bank figures show first home buyers getting a record high share of new mortgage money for the second consecutive month

Latest Reserve Bank figures show first home buyers getting a record high share of new mortgage money for the second consecutive month

By David Hargreaves

First home buyers last month enjoyed a second straight month with a record high share of the mortgage money handed out by the banks, according to the Reserve Bank's latest monthly borrowing by lender type figures.

In figures that continue to show surprising resilience in the housing market, the FBHs accounted for $700 million of the $4.051 billion advanced in mortgages by the banks.

In percentage terms that was a 17.3% share for the FHBs of all the monies advanced. That's a new record high since the RBNZ started publishing the figures in August 2014 and it just topped the 17.2% share (previous record), which was registered just the previous month, in December.

And while you might immediately wonder if the FHBs are just grabbing a bigger share of a smaller pot - well, actually no.

The $4.051 billion advanced in total in January was the largest total for a January since 2016, when $4.117 billion was advanced.

And it's worth noting that in January 2016 the FHBs borrowed just $459 million, which was only 11.1% of the total and some $241 million (34.4%) less than the amount the same grouping borrowed last month.

In January 2018 the FHBs borrowed $564 million, so last month's total was $136 million, or 24.1% higher.

For those who like to look at how many mortgages/people these figures mean, rather than just looking at the dollars, in the latest January there were 1771 mortgages taken out by FHBs, compared with 1398 in January 2018 - so, that's a 26.7% increase.

As stated higher up, the overall mortgage total for the January month was the highest for that month since 2016 and was some $355 million up on the amount advanced in January last year. The FHBs accounted for 38.3% of the increase.

The latest figures continue to show a subdued picture for investors - though here the waters have been somewhat muddied by the recent decision of one of the major banks to reclassify some mortgages from the investor category to owner-occupier category. 

Without seeing an individual breakdown of figures, it's hard to exactly quantify the difference that's made, but there was a sharp drop - of around 2-3% - in the share reported as being advanced to investors in the past couple of months.

The latest figures give $726 million as advanced to investors in January, which is down from $779 million in January 2018. Last month the investors made up 17.9% of the total - which was slightly higher than the share of this category in December.

January was the first month of course following the Reserve Bank's loosening of the limits on high loan to value ratio (LVR) lending. 

These latest figures, while showing a continuation of recent trends, don't seem to suggest there was an immediate rush for buyers to get in after the loosening of the limits.

However, figures from February onwards will likely give a clearer picture.

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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19
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Lambs. Slaughter.

17
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A case of "premature acquisition". If only they had waited 6 more months they would be paying half of what they are paying now.

Suckers.

"If only they had waited 6 more months they would be paying half of what they are paying now."

Yeah right I bet you'll be saying that in 6 months time too.

Isn't this what everyone wanted ? a reduction in the investor activity so FHB's got better choice ? These loans are done on some fairly hefty calculations 7% acid test to qualify I understand, banks are not giving easy or reckless loans away.

Can't you be happy young people are earning good money and setting up homes for themselves living their lives. Not everyone's a peasant.

I find your suckers comment rude and arrogant - bitter and twisted.

A case of Poe's law methinks.

"Yeah right I bet you'll be saying that in 6 months time too."

Wrong! If they waited 12 months they would be paying 100% less than they are paying now. Try and keep up Shoreman.

That's not how that works, 50% of 50% is 25% not 0%.

10
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HeavyG, Shoreman, neither of you could give a stuff about anything other than your own bank accounts. Do you care about the financial mess the next generation could be caught up in? Have you considered the resulting social instability both you would complain the loudest about....?????

HeavyG is just taking the mickey at the expense of both resident "DGMs" and FHB's ;-)

RP You sound twitchy worried about your TD's ?? You have no idea what I give a stuff about so speak for yourself thx. I care about people getting on with their lives and if they meet the stringent bank requirements and can purchase a home great, if they can't great to they shouldn't beable to buy.

11
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Shoreman, signing up the next generation to 30-year debt at the height of an asset bubble is not stringent lending - its reckless. Banks are protecting themselves by introducing the naive to the "so called" path to riches while investors flee.

Anyway, you spat the dummy when I rebuked your bent theories that NZ banks were out to steal my money "Cypris style". You subsequently promised you weren't going to acknowledge my comments. What's changed? Was it RBNZ talk of banks increasing capital or the discussion about deposit insurance. I think you're missing in action to be honest.

RP you worry to much, it's hard to live life thinking it's always going to crash, relax other people will live their lives and certainly don't need to be dragged down. I say this winter will be the best buying opportunities and hopefully we will be rid of this COL next year yeh !

You're the one who despises FHBs who are buying now as you see them as traitors to the cause, that cause being the almighty crash as foretold by RP, the new Moses of the property crash gods.

I'm not buying your faux concern for FHBs.

The other week he had a massive dig at me over buying my first home. Made all sorts of wild unsubstantiated claims that I was overleveraged and on a highway to a hiding when it call comes crashing down.

Average FHB mortgage ~$400k.
And now FHB make up >60% of the >80% LVR mortgages, and presumably these are the one with the higher than average mortgage size.
I hope for their sakes it doesn't crash.

FHB , LVR above 80 percent January 2017,107 million, January 2018 146 million, January 2019 280 million .

FHB have stripped their Kiwisaverand piggy banks, and improved their lot by taking on mortgages with less equity.
No renaissance in sight for Auckland, where prices and volumes will continue to fall., where the percentage of FHB drift downwards. .Once the regions turn , what will happen to the nations housing market and the FHB who have recently purchased.

As long as they can afford their payments...nothing. Agree dynamics suck.

Good to see the FHB getting into their own houses

14
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Its good is it? Good for who exactly? Shallow observations such as this are often made right before a fall of unknown magnitude, risking the financial security of many.

It's good to save up with the aim of purchasing one's own home - yes. Why buy into a 30-year contract at the height of an asset bubble? Its risking financial ruin.

We can't all live under a leaking pile of cash.

Agreed with caveat. For FHB's, timing of their entry is crucial to their financial survival in no different way that investors appear to be timing their exit en mass to protect their finances.

Have you been saving up .... your posts and anger rp. I agree with yvil, it's good to see fhb getting in and getting on. And not all are buying the hyped Auckland market, some are venturing into the regions while they still can

Houseworks says "some are venturing into the regions while they still can"

Step right up folks, get in quick. Those 30-year mortgages are in short supply - lol!

Seriously now, there is no hurry. Region property prices are overcooked whilst banks are in the business of lending as much as they can. From their standpoint, protecting their asset base is the number one priority, keep it all from deflating. Bring increased capital requirements into the mix together with property deflation only a 3-1/2 hour flight away, the future looks very interesting indeed.

Its a 30 year loan at today's contributions and interest rate. A 30 year loan is not the same as taking 30 years to repay a loan. It is a method for calculating a payment amount today. Things can get better, and things can get worse but on average things get better over 30 years.

Hi laminar
I admire you for trying but it's hard if not impossible to explain things to a "blind" pessimist

Houseworks, please forgive me. I do sometimes laugh at those who believe Trump will deliver the world prosperity in the long run. It's quite disrespectful really.

It's sad when the only times you laugh is when you laugh AT someone

HW confusing pessimist with realist.

"First, let me remind you that a pessimist is an optimist who shed his delusions and denial, and educated himself"

http://patzek-lifeitself.blogspot.com/2018/12/a-requiem-for-beautiful-ea...

As pessimists/realists I would like to hope you will be more successful and higher achieving than us cautious optimists, but in whatever you do you want to be successful and you have to take some calculated risk.

In the past yes in a frow for ever economics model on a finite planet. My view with Peak oil, massive debt, CC effects etc is the next 30 years will be considerably worse.

@RP its not an unknown magnitude, its 50% in 6 months.

Yep and 100% in 12 months

Agree totally with you Yvil.
Unfortunately the doomsayers don't seem to comprehend;
- that buying a first home has considerable intrinsic value especially related to tenure and security for family,
- getting into a first home now is about not putting your life on hold for something that may or may not happen and if it does one's bank has already been prudent enough in their own interest in their lending to ensure that you will be able to weather a correction, and
- that the first home is a long term commitment and that while the market is going to fluctuate, in the long term the trend has positive and home owners have gained far greater financial security than those who rent for life.
I give these doomsayers little credibility. The RBNZ with all their resources and expertise see a flat market with some fluctuation (although acknowledging some risk). However, the doomsayers having been making these unsupported wild statements for the past decade.

Printer8 - Well said indeed !

I was looking at some 3 bedroom apartments in central Adelaide for around the $280,000 NZD mark the other day. Adelaide is around the same size as Auckland - what does $280,000 get you there?

Just wondering where the best bang for the FHB buck is. Thanks in advance!

Probably a one bedroom apartment in the CBD I'd say - maybe

Don’t be like that, no doubt it’ll come with an integrated eco friendly “rain powered” water feature in every room, which is nice.

You can't compare the booming metropolis and dynamic beta+ global super-city of Auckland with gamma+ Adelaide.

Yup ... Adelaide only has 11 local beaches .. the Barossa Wineries , Hahndorf , the Central Market . Rundle Mall ... an efficient and cheap public transport system ... an integrated domestic/international airport building , near the CBD ...

... Orc Land has so much more to offer than that ... oooooooooh yessssssss .....

Not ssre i'd be raving about Adelaide Airport.. its a domestic terminal with a couple doors they shut to segregate about three jetways for international departures. And not much better on the arrivals side. But at least if you have a long wait Ikea is only 5 mins away :P

it's new, clean and easy to navigate though. Although sure lacking slightly in amenities

Have you ever spent any time in Adelaide? Its not bad, if it wasn't full of Australians i'd even say its pretty nice really.

Adelaide has a much richer city life than Auckland. The Central Markets are brilliant, the arts festival and fringe goes off, and its got a world class downtown sports stadium.
Auckland City is positively boring in comparison

Adelaide's city layout is the envy of many Auckland planners.
In Adelaide if you head south-west, you will ended up in beautiful Glenelg beach, Hallet Cove park. Head north -east and you will end up in trendy gorgeous Adelaide Hill and the wineries
Auckland if you head south-west, you will end up in Otara, Manurewa Randwick Park (best to leave your iPhone at home). Head north east for that congested bridge!

Well go and live in Adelaide if it is so much better than Auckland!
Personally wouldn’t live in Auckland even if house prices were half what they were!
Have visited many countries around the world and I would only live in Australasia!
Out of the places in Australia I would live would be Queensland, out of NZ the place I would reside was Christchurch due to quality of life and opportunities!,

That is a good point THE MAN 2. Why don't more young Aucklanders head to Adelaide?

Lack of jobs. It’s a really nice city but it’s economy is mediocre.

Hi Zachary (and others),

With respect, please note that every time an Aucklander moves to Adelaide, it raises the average IQ (intelligence) in both cities.

TTP

The Aussie jibes are frankly tiring, and small minded. Australia is a great country as are its people (obviously the odd bad egg, like anywhere). There are plenty of things the Aussies are doing much smarter than kiwis are doing.

HaughhahaHa. yeah dumb Aussies. That's why they call it the brain drain. Oh wait...

@ saving4AUhouse
In Auckland, with $280,000 you can get a nice dry garage to park your used Jap import BMW

But make sure you get the BMW wagon.. The sedan isn't roomy enough to sleep in..

"But make sure you get the BMW wagon."

Better to sleep in style: shout yourself a second-hand hearse.

TTP

Meanwhile, even San Fransisco is in on the action making Auckland prices look bad:

https://www.zillow.com/homes/for_sale/San-Francisco-CA/pmf,pf_pt/condo_t...

Let alone if one were to commute from say...an Albany distance / commute time from the CBD.

Rather than a nice apartment in SF, there's always a 2-br 1-bth apartment by the mall in Albany for $800k: https://www.trademe.co.nz/property/residential-property-for-sale/auction...

Christ, my brother has just moved to the outskirts of London, bought a 3 bedroom townhouse in a middling area for circa NZ $650.... friggin rip off, Auckland is. Will be surprised if we don't follow in the footsteps of the Australian decline

12
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“First home buyers last month enjoyed a second straight month with a record high share of the mortgage money...”
Ask Sydney FHBs who’ve bought in the past 2-3 years how they are enjoying their mortgages. Down well over 20% in places already. NZ will follow.

RBNZ figures show investor activity is down considerably. For the six months to January for :
Jan 2015 - 27,160 mortgages
Jan 2016 - 32,586
Jan 2017 - 24,479
Jan 2018 - 18,890
Jan 2019 - 17,897.
Current housing market (high prices with low yields, and lack of potential capital gains) along with anti-landlord government legislation (compliance requirements and potential capital gains) mean it is not ideal time for property investors.
While the anti-landlord brigade will be in a state of glee, the implication for the future is increasing rental shortage and increasing rents.

Note: Comment in article regarding a bank recently re-classifying investor mortgages as owner-occupier is probably not that significant in the longer term trend)

....in that case the other implication is increasing home ownership and less renting.

Not if you believe the doomsayers on this site who ridicule the notion of FHB buying property. :)

,,they don't ridicule home ownership, but point out that buying now is peak bubble. Un fog the glasses...this is a terrible time to buy and FHB's should be warned away.

Morally indefensible encouraging the naive into this market.

Won't the demand be offset by increasing FHB's? I thought getting home ownership rates back up again would be a good thing for society?
I really don't understand the narrative of some, like Judith the other morning on the AM Show, talking about the proposed CGT, saying it'll turn investors off, which is a bad thing in her opinion. My opinion is, if you have to rely on a capital gain to make a rental property worthwhile then you're primarily speculating, which has caused this whole mess in the first place.To then have the audacity to gaslight everyone by pretending to care about renters financial wellfare is pretty immoral.

Meh. I have no choice. Biological clocks don't stop ticking for asset bubbles. Buy a quality house, stick with it and if you can grind out a period of negative equity while you go down to one income then you might as well pull the trigger and lock in a low rate for a while.

If we where to go live over sea.. Adelaide would be the place....
Cant compare it to Auckland thu.. it is basically a carbon copy of Christchurch.. from the Port hills to the ocean... except hotter and better roads, planning..

FOMO now and FONGO later. Blood on the streets.