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New mortgage lending still slim

Investors are still sitting on the sidelines of the residential housing market.

Friday, May 06th 2022

Although new mortgage lending was up to $1.3 billion in March from $1.1 billion in February, it was an annual drop of 44%, the latest Reserve Bank figures show.

Investors accounted for 17% of new mortgage commitments down from 18.5% in February, making this the first drop since December last year and lending to investors with high loan-to-value ratios (LVRs) of 60% rose from 31.4% in February to 32.1% in March. 

Total monthly new mortgage lending topped $7.3 billion in March, up $1.6 billion, or 27.5%, from February but well down on the all-time high of $10.4 billion advanced in the same month last year, when the market had a huge head of steam.

While new the new mortgages value is 17.7% higher than in March 2020, the Reserve Bank says the composition is quite different. Fewer borrowers took out mortgages, but the average size of loans has risen 44.5%. In March the number of mortgages advanced was down by 18.6% from 22,631 in March 2020 to 18,424.

First home buyers were lent $1.2 billion in mortgages in March, up $247m from February, but a decrease of 32.3% from last year. This group had a 16.5% share of the market in March, down slightly from 16.7% in February, the third consecutive drop since it peaked in December last year.

New mortgage commitments to other owner occupiers were up from $3.6 billion in February to $4.7 billion, but fell 25.6% over the year. The market share for other owner occupiers with high LVRs rose from 2.6% to 2.9%, the highest level recorded since December last year.

Consents up

Meanwhile, a record 5,303 new houses were consented in March - the highest ever for any month of the year, and is up 26% on March last year, Statistics NZ data show.

In the year to the end of March, a record 50,858 new houses were consented, up 24% compared to the previous 12 months. This is the first time the number of homes consented had passed 50,000 in any 12-month period.

Also for the first time more multi-unit homes than stand-alone houses have been consented in any 12 month period.

Over the year to March, 25,475 multi-unit homes such as townhouses, apartments, home units and retirement village units were consented, overtaking the 25,383 stand-alone houses that were consented in the same period.

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