By David Hargreaves
So, yes, March was a SLOW month in the housing market. A slow March. Certainly not a sprint.
We sort of knew that, but the Reserve Bank's latest monthly borrowing by lender type figures released on Monday have provided ample proof.
The $5.769 billion total borrowed in what is usually a busy month was the lowest total for a March recorded in a series that the RBNZ has been publishing since August 2014.
If we look back to March 2016 prior to the RBNZ's introduction of tough deposit limits for housing investors, we can see that in that month some $6.572 billion was borrowed in total.
And yes, the big difference is in what the investors are borrowing.
In March 2019 the investors accounted for $1.096 billion, or just under 19% of the total, while in March 2016 the investor grouping accounted for $2.141 billion of borrowing, or 32.6% of the total.
The rapid retreat of the investors since those days has seemingly left more room in the market for the first home buyers and the latest month has seen a continuation of that trend.
In March 2019 the FHBs borrowed $999 million, which made up about 17.3% of the total. That percentage tally pretty much equals the record high share the FHBs had (since the start of this statistics series) in January.
Comparing apples with apples, in March 2016, the FHB grouping borrowed $753 million, which accounted for just 11.5% of the total.
The FHB borrowing figure for the latest month was 9.7% higher than the $911 million borrowed by this grouping a year ago.
However, the latest monthly borrowing figures overall would suggest that the loosening of lending limits that the RBNZ put in place at the start of January have not had any particularly stimulatory effect on lending. Of course we don't know how much the lending figures might have dropped further if the lending restrictions hadn't been loosened.
The current borrowing figures would again suggest that further loosening of RBNZ lending limits this year is on the cards.
The next time the RBNZ will look at the issue will be in its next Financial Stability Report at the end of May.
Given that it has been only a few months since the last relaxation of the rules was put in place, the RBNZ may want to sit on its hands this time around, but come the next FSR in November, the chances would seem high there will be further relaxation of the lending rules.
That's of course unless there's a marked uptick in housing activity between now and then.
This seems unlikely, but if the RBNZ does decide to drop the Official Cash Rate as early as next month - which is very possible - then this would certainly potentially help to stimulate activity.
The fact that the RBNZ has indicated it may well cut interest rates would be a very good reason for it to wait for any further loosening of bank lending limits.