RBNZ releases latest data on borrowing activity

Data released a few months after new housing reforms and LVR reinstatement

RBNZ releases latest data on borrowing activity

The housing market in New Zealand continues to cool down a few months after the government introduced new housing reforms and reinstated loan-to-value ratio (LVR) restrictions, with property investors and homebuyers borrowing less, according to the latest Reserve Bank of New Zealand (RBNZ) data.

The RBNZ revealed that monthly new mortgage commitments totalled $8.5 billion in June 2021, down $0.4 billion (-4.4%) from the previous month, but a new high for June in any year on record. During the same month, new mortgage commitments to investors totalled $1.4 billion, down from $1.6 billion in the previous month, but an annual increase of 38.0%

First-home buyers’ (FHBs) new mortgage commitments were $1.6 billion in June 2021, down from $1.8 billion in May, but a 51.3% increase from last year. Meanwhile, new mortgage commitments to other owner-occupiers were down from $5.5 billion in May to $5.4 billion in June, still a 68.4% increase over the year. 

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The RBNZ found that investors accounted for 16.8% of new mortgage commitments in June 2021, down from a 17.6% share in the previous month. Meanwhile, FHBs had a share of 19.3% in the same month, down from 19.7%. By contrast, owner-occupiers rose from 61.6% to 62.9%.

The central bank also revealed that the share of new mortgage commitments with high LVR to investors was down from 32.1% in May 2021 to 28.2% in June 2021, marking the seventh consecutive month of decline. Meanwhile, FHBs remained unchanged at 37.7%, and other owner-occupiers rose from 3.0% to 3.5%.

The latest RBNZ data on borrowing activity aligned with experts’ data, with Loan Market Wellington mortgage adviser Craig Pope claiming he had seen “60% less investor loans” in recent months.

“I think investors are reaching a point where it’s just too much debt to keep leveraging,” Pope said, as reported by Good Returns.

Edge Mortgages director Glen McLeod noticed the same trend in the New Zealand property market, particularly among investors with one or two investment properties.

“The hardcore investors don’t seem to be too bothered by the changes,” McLeod said, as reported by Good Returns.