Reserve Bank: Mortgage lending exceeds $10 billion for the first time

by Roxanne Libatique01 May 2021

Mortgage lending has skyrocketed in March 2021, crossing the $10 billion mark for the first time, according to the Reserve Bank of New Zealand’s (RBNZ) latest data.

RBNZ’s report stated that the $10.4 billion borrowed in March 2021 was the highest amount since the central bank started recording mortgage data in August 2014. It was also the latest in a series of record figures set in the final months of the year.

Of the borrowing for mortgage, $2.3 billion went to property investors, $1.7 billion to first-home buyers, and $6.2 billion to existing owner-occupiers.

The $2.3 billion borrowed by investors was down on the $2.45 billion borrowed in December 2020 and down on investors’ $2.48 billion record in May 2016. Meanwhile, first-home buyers’ $1.7 billion was a record-high, surpassing the previous record of $1.68 billion in December 2020.

Read more: Average New Zealand house price hits new record

CoreLogic senior property economist Kelvin Davidson commented that the higher loan-to-value ratios (LVRs) reinstated in March 2021 had significantly curtailed the low-deposit investor flows.

“That’s to be fully expected, given that the banks themselves had already moved well ahead of the official date for tighter LVRs, and have actually gone further, already requiring a 40% deposit [for investors], which the Reserve Bank will mandate from May 01,” Davidson said, as reported by Stuff.

He also noted that the impacts of the government’s housing package, which aims to dampen higher-debt investor activity, would start to filter through over the coming months.

“We don’t anticipate the interest deductibility and bright-line changes to cause a sell-off by current landlords, but further purchases are likely to be curtailed (especially for existing properties by leveraged investors),” Davidson said.

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