News

Investor lending exodus

It is investors, not first home buyers, who are bearing the brunt of the LVRs and retreating from the borrowing arena, new Reserve Bank data shows.

Friday, August 25th 2017

The slower housing market has recently prompted a slew of calls for the Reserve Bank’s LVRs to be reviewed on the grounds that they are hurting first home buyers.

However, the Reserve Bank residential mortgage lending data for July is now out and it highlights the fact that it is lending to investors which is on a steep decline, not lending to first home buyers.

July saw total new lending of $4.802 billion, which was down on June’s total of $5.097 billion and is a reflection of the cooler market.

When compared to the same time last year the decline in lending is even more pronounced: in July 2016 there was $6.305 billion of new lending.

Within that lending total, investors were responsible for $1.062 billion in July.

Not only is that figure a drop on the $1.219 billion investors borrowed in June, but it is down by nearly 50% on the $2.095 billion of investor lending in July 2016.

In contrast, lending to first home buyers was up year-on-year. They borrowed $699 million in July, which was up on the $689 million they borrowed in July last year.

Given the latest round of LVRs, which requires investors to stump up a 40% deposit, have now been in play for a year, this data leaves little doubt they have led investors to pull back on the lending front.

Their departure has left a gap in the market for first home buyers and it appears they are moving into it.

It is worth noting that lending to other owner-occupiers was also down in July, as well as year-on-year. They accounted for $2.985 billion of lending in July, as compared to $3.457 billion in July 2016.

Meanwhile, the higher than 80% LVR lending data provides another indication of just how much impact the LVRs have had on investors.

While higher than 80% LVR lending was down across all borrower groups year-on-year, both first home buyers and other owner occupiers saw an increase in higher than 80% lending in July.

However, the drop off in higher than 80% LVR lending to investors is stark.

Back in July 2016, investors were responsible for higher than 80% LVR lending to the tune of $26 million.

But by June this year higher than 80% LVR lending to investors was down to $9 million and in July it fell even further to just $2 million.

While both investors, and the broader market, might be feeling the effects of the LVR regime, economists say it is unlikely that the Reserve Bank will lift the LVRs anytime soon.

Read more:

LVRs are not going anywhere 

No end in sight for LVRS 

Comments

No comments yet

Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

More Stories

Support for regulation

Monday, March 18th 2024

Support for regulation

REINZ has emphasised the need for property management regulation to Parliament’s Social Services and Community Committee.

A better investment market

Thursday, March 14th 2024

A better investment market

“Reinstatement of interest deductibility starting from the new tax year on 1 April brings property investors back in line with every other business in the country, where interest costs are a legitimate deductible expense," Tim Horsbrugh, New Zealand Property Investors Federation (NZPIF) executive committee member says.

[OPINION] Recessionary times

Thursday, March 14th 2024

[OPINION] Recessionary times

It is not the best out there for many businesses and property sector people. Sales are down across the board, our clients’ confidence is falling, and there is a lot of uncertainty.

Interest rate expectations: It’s not over yet

Thursday, March 07th 2024

Interest rate expectations: It’s not over yet

Most Kiwis think interest rate increases have peaked.