Mortgage lending by New Zealand banks drops in March

Gross new residential mortgage lending volume was $5.77 billion in March, 20% higher than the previous month, according to the latest mortgage data from the Reserve Bank of New Zealand (RBNZ).

However, the figures also show about $80 million year-on-year drop in mortgage lending in March. This overall drop in lending was the first since March last year, and was driven solely by investors, CoreLogic senior property economist Kelvin Davidson said.

RBNZ data show a year-on-year increase in overall mortgage lending for the majority of borrower types, except for investors at $1.10 billion (down 20%). Total lending for first-home buyers sits at $999 million (up 10%), other owner-occupier at $3.60 billion (up 3%), and other borrowers for business purposes at $78 million (up 8%).

The figures show a total of $5.17 billion in new commitments for loan-to-valuation ratio (LVR) 80% or below, and $595 million worth of new commitments for LVR above 80% in March.

Read more: Property market: it’s 2018 all over again

In a CoreLogic analysis, Davidson detailed two other key points from RBNZ’s latest mortgage lending statistics. These include the “soft” number of loans, but each loan on average is bigger; and that banks are still operating well below the LVR speed limits.

“For those that can pass the deposit, income/expense and serviceability testing hurdles, the competition amongst banks and ‘rate wars’ are still making it a great time to be a borrower,” Davidson said.

Moreover, with the scrapped prospect of a broad-based capital gains tax (CGT), Davidson expects few would-be property investors to be back in the property market.