Lending strong – before lockdown

Wednesday 29 April 2020

The latest Reserve Bank data shows lending remained strong until New Zealand entered lockdown, with $6.1 billion of mortgage lending in March.

The $6.1 billion total was the highest March lending figure since 2016, when mortgage borrowers received $6.57 billion. 

Even with four lost working days, borrowing last month surpassed March 2019, when lending reached $5.7 billion.

The figures paint a picture of health for the housing market before the onset of Covid-19 and the nationwide lockdown imposed on March 26.

Last month, investors borrowed $1.3 billion, their highest monthly total since July 2018, the data shows.

First home buyers, meanwhile, borrowed $1.13 billion, up from $999 million in March 2019. 

High-LVR lending remained subdued at $624 million, up from $595 million in March last year. 

The lending data came before the worst of the Covid-19 pandemic and global economic turmoil caused by the outbreak.

Next month's figures are expected to detail the biggest ever decline in lending on record, as people remained locked in their homes and unable to complete purchases. 

CoreLogic's Kelvin Davidson said: "Lending flows were still strong, but we started to see a slowdown, which is not surprising given the loss of four working days."

Davidson said the data indicates many borrowers moved to interest-only lending, with people "reacting instantly to those changes" from Covid-19.

He said next month's figures would be "a lottery", with some activity this month, but "mostly maintenance stuff, with people switching to interest-only". 

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