by Miriam Bell
New data from the Reserve Bank shows that total new mortgage commitments, with an LVR of 80% or below, jumped from $4,668 million in November to $5,075 million in December.
The low deposit (ie: an LVR of above 80%) loan share of total new mortgage lending, excluding exemptions, fell from 8.6% in November to 8.2% in December.
This fall came about even though Kiwibank stopped high LVR lending in November as it feared breaching the Reserve Bank limits which restrict its low deposit lending to just 10% of total lending each month (See: Kiwibank hits the brakes)
Overall the latest data confirms the RBNZ's 2013 move to restrict high LVR lending continues to have some impact on the housing market.
The Co-operative Bank chief executive Bruce McLachlan said the high LVR lending figure was a reduction on the previous three months.
"This is interesting - given that December was a strong month for the market in terms of indicators like house sales and home approvals. Yet that hasn't come through in an increase in low deposit lending."
This could indicate less activity from first home buyers - who make up the sector of the market to feel most impact from the RBNZ's LVR lending restrictions.
Yet, in McLachlan's opinion, the strength of the housing market is broad-based and of good quality.
However, current low interest rates continue to spur on the market and, particularly in Auckland, house prices are growing rapidly, he continued.
"That is not necessarily a good thing. We don't want house prices to get out of control."
Some modest intervention from the RBNZ could help to restrain the market, again particularly in Auckland, a little, McLachlan said.
"That would be in our best interests. We don't want booms and busts in the New Zealand market and some intervention could cool prices."
While there are ongoing hopes that the RBNZ will remove the LVR lending restrictions, it seems unlikely that this will happen any time soon.
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