Number of new mortgages falls; further sign super city cooling

by Maya Breen31 Oct 2016
New data from research firm myvalocity has revealed that year-on-year, the number of new residential mortgage registrations nationally fell by 21% in September.

The most noticeable drop was in Auckland, down 26.2% and a decrease of 15.6% was seen in other North Island centres compared to the same time last year.

myvalocity chief executive Carmen Vicelich said mortgage registrations were another measure showing a cooling-off in the market, along with price and sales volume data.

"Mortgage registrations are a good indicator of the financial performance of the market as it tracks the behavior of all active buyers rather than just what is actually selling at the time," Vicelich says.

"The sharp decline in mortgage registrations is one of the most interesting trends we have seen for a while as despite good migration, record low interest rates and the price pressure that still exists in the property market, the number of mortgage registrations has consistently declined in recent months.

"This is something we have not seen before. The property market is, to some extent, seasonal and traditionally we expect to see a rise in mortgage registrations in spring, however this has not been the case so far this year."

According to the data, mortgage registrations hit a high in October 2015 and underwent a dramatic decline between December 2015 and March 2016.

Vicelich says this is an indication that the central bank’s LVR limits and the continual lack of supply are making an impact. 

"Our data shows the number of active investors in the market has declined in recent months at a higher rate than any other buyer type - particularly in Auckland.

"The number of active investors in the market is down 19 per cent nationally on the same time last year, which indicates the brakes are starting to come on.

"The decline in the number of mortgage registrations is also a reflection of the current lack of stock or supply which is lower than the same time last year. Fewer homes for sale means fewer people moving and requiring new mortgages."

“There is a hell of a lot less activity in the market,” Squirrel’s John Bolton said in a Fairfax article, noting properties were becoming harder to sell compared to three or four months ago. 

"The Reserve Bank has not only stopped house price inflation but has taken a lot of the liquidity out of the market. I think that's a bit dangerous."

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