Gross mortgage lending across the residental market has reached $6.47 billion in May, a 1% decline on the same month last year, according to the latest mortgage data from the Reserve Bank of New Zealand (RBNZ).
However, mortgage lending approved by New Zealand banks in May was up 18% month-on-month, with an increase in overall mortgage lending for all borrower types. Total lending for first-home buyers sits at $1.15 billion (up 19%), other owner-occupier at $4.11 billion (up 19%), investors at $1.14 billion (up 15%) and other borrowers for business purposes at $68 million (up 21%).
The figures show a total of $5.76 billion in new commitments for loan-to-valuation ratio (LVR) 80% or below, and $707 million worth of new commitments for LVR above 80% in May.
In a CoreLogic analysis, senior property economist Kelvin Davidson said latest statement from the RBNZ strongly suggests another official cash rate cut in August. He also believes there’s a good chance that the LVR rules will be relaxed again in November.
“However, with the banks likely to have to start boosting their capital reserves from April next year, ‘restraint’ will be the order of the day,” he said.
Davidson also emphasises non-performing loan ratios for all of the major lenders at less than 1%.
“In other words, mortgage repayment problems are very low in NZ, which partly reflects the stringent tests that prospective borrowers have to pass to get a loan in the first place,” he added.