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New low for investor mortgage share

Investors are continuing to feel the pinch of policy restraints with new data showing another drop in their take up of new mortgage lending.

Tuesday, January 30th 2018, 1:31PM

by Miriam Bell

The Reserve Bank has released its new mortgage lending data for December 2018 and it reveals that the share of new lending going to investors has declined further.

Despite a Spring recovery in housing market activity in the last months of 2017, total new mortgage lending fell to $5.092 billion in December.

That’s down from November’s total new lending of $5.293 billion, which was the highest amount recorded since May 2017.

Owner-occupiers accounted for $3.199 billion, investors accounted for $1.066 billion and first home buyers accounted for $767 million of December’s new lending.

New lending to all borrower groups was down, but the share of new lending going to investors reached a new low: it now amounts to under 21%

Back in 2016, prior to the introduction of the Reserve Bank’s last round of investor-focused LVRs, investors’ share of total lending was hovering around the 35% plus mark.

This highlights, once again, just how steep a decline there has been in mortgage lending to investors.

In contrast, the share of new lending going to owner-occupiers remains steady at nearly 63%, while the first home buyers’ share has gone up to around 15%.

Additionally, the amount of new higher than 80% LVR lending going to first home buyers increased to $197 million in December from $173 million in November.

The amount of new higher than 80% LVR lending going to investors came in at $7 million in December, as compared to $6 million in November.

Further evidence of this trend can be seen in recent CoreLogic data which shows that the share of sales going to mortgaged investors has fallen to less than 25%, while the share of sales going to first home buyers is on the rise.

CoreLogic’s head of research Nick Goodall says it’s worth noting that while all buyers were affected by the tightening of credit, it was investors that were affected the most.

Investors now find themselves under increased scrutiny from the new government – and with no respite in 2018 likely, he says.

That’s because the government has already passed the Healthy Homes Guarantee Act into law and is now pushing their foreign buyers ban bill through Parliament.

On top of this, investors are set to see the extension of the bright line test to five years around April and tax changes to end the ability to negatively gear investment property are expected.

These changes are likely to have an impact on many investors – even though credit restrictions have now been eased.

Starting from 1 January 2018, the Reserve Bank relaxed its LVR restrictions slightly, which means investors need only a 35% deposit rather than a 40% deposit.

But economists don’t expect this easing of the LVRs to have a huge impact on the market, at least in part because the new government’s housing policies are expected to exert downward pressure.

Tags: Lending LVR mortgages RBNZ Reserve Bank

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.65 4.85 4.99
ANZ Special - 4.15 4.35 4.49
ASB Bank 5.80 4.59 4.69 4.79
ASB Bank Special - 4.19 4.29 4.39
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.19 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.90 4.95 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.85 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.69 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.19 4.19 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 ▼3.95 4.49
Sovereign 5.90 4.59 4.69 4.79
Sovereign Special - 4.19 4.29 4.39
The Co-operative Bank - Owner Occ 5.75 4.19 ▼4.35 4.49
The Co-operative Bank - Standard 5.75 4.69 ▼4.85 4.99
TSB Bank 5.80 4.69 4.69 4.99
TSB Special - 4.19 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.19 4.29 4.49
Median 5.89 4.62 4.69 4.79

Last updated: 19 October 2018 6:18pm

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